The Bay Area housing market is world renowned for having some of the highest property values anywhere in the United States. But that doesn’t mean that it’s easy to sell property that requires a great deal of work. Prospective home buyers are not looking to perform numerous renovations on homes that they want to move into. They want their homes to be move in ready, and they don’t want to have to take out a second loan for renovations.
That being said, San Francisco is always a great market to be selling a home in. The Bay area is the land of the seller’s market where properties are always difficult to come by and seems like the values of properties are always appreciating. So what are sellers that need to unload a home in not-so-great condition doing? They’re partnering with renovation companies that agree to take on any and all repairs for a cut of the final selling price.
“This is one of those rare situations where it really is win – win for both parties. Essentially, a renovation team comes in and works out the issues with the house in order to get it ready for the market,” says one real estate analyst from the Bay Area. “A lot of times, these are homes that have major problems with them like issues with the roof, substantial water damage, outdated electrical wiring, or serious issues to the plumbing and the kitchen. The renovation team essentially comes in and makes the necessary repairs, and with no money down, a home seller can a much better deal on their home without either putting in the money themselves or selling way under the market value. It ends up being profitable for the renovation company, because obviously they make revenue on the work itself, and they’re paid through the sale of the house. It works out well in places like San Diego and San Francisco where the value of the average home is significantly higher than most of the rest of the country.”
“Nine times out of ten, if a homeowner wants to unload a property that requires a lot of work to get it market ready, they end up having to either pay for all the repairs themselves, which essentially they see maybe a 75% return on their investment, or they end up unloading it for 50% of the market value, sometimes less,” he continued. “A renovation and real estate company has no qualms about partnering with individual home sellers, fixing up the house, and then sharing in a substantially greater pie than the homeowner would otherwise get. It ends up working out for everyone.”