Real Estate Construction Scam
Certain real estate companies will promise you the world on a home sale by promising you the highest sale price telling you they will pay for your remodel themselves.
I'm going to show you how to avoid the little potholes and save some money that they're trying to take from you. So if you're looking to fund a remodel, if you're in the market, and you're interviewing brokerages, beware, beware, beware. There are real estate brokerages that have programs called “concierge” that promise they will fund your remodel (at no cost to you) to get a higher sales price and a faster home sale. What they DON’T tell you is that a lot of the added equity gets put into their pocket! Let’s dive in and I'm going to show you how it works.
Now, you have brokerages that say, "We'll fund the remodel," and they do it with what we call a lipstick remodel. Very minimal. Maybe they'll do the countertops, maybe they'll paint the cabinet, maybe they'll stage it. So that's all they do. What they are trying to do is, just go a little bit above and beyond to beef up the sale price a little bit, which means more commission for them. They are NOT maximizing the remodel for maximized selling price, which is what most want to do.
If you’re remodeling only to maximize to sell a home, MAXIMUM value should be the target. A home sale is a subjective thing. Its subjective to the end buyers’ taste, neighborhood preference, mindset on money, negotiation techniques and so on. So, remodeling the correct way will ensure you get what’s owed to you and your family when exiting a home. A lipstick remodel where you only do a little will not warrant the best sale price, remember, price is what one pays, value is what one gets. If you are not providing top level value, you will not be able to ask for top level pricing (at least not in a way you can feel good about). So why would real estate agents tell you to half ass a home renovation?
Here’s the motive.
What these brokers do not tell you is when you sell a home, is that the commission that the realtor gets paid, 3-6% typically, get taken from the GROSS, NOT from your profit. So if you have a home that sells for a million dollars, but you owe 800 grand to the bank, that’s 200k equity or profit you would receive in a home sale (less closing cost obviously). 3- 6% real estate commission does not come out of the 200k you made; it comes from the 1 million you sold for. Most people do not know this fact and often run numbers for commission factors on the net profits and not the gross sale price. We want you to avoid this mistake and make sure you are armed with the correct knowledge so that you make the best decision for yourself and your family. People get their HUD-1 statement at the end of the home sale and figure out too late that it was totally different from what they budgeted for. There is a reason there are more agent than homes for sale in certain markets. Everyone is looking out for their own interest, not yours. Most real estate agents won't disclose the numbers to you so we are disclosing it to you now. So look, you don't need a real estate agent or a brokerage to handle your remodel whether it be for a home sale or for your own personal living. You want to go out there and get with a construction company that can actually help you implement what you're trying to implement. Now, you have new data. It's up to you to use that data so you can actually get what you want out of your home. And we are not saying this as a construction company, we are saying this as someone with you rbest interest in heart when it comes to your home, your renovation and your money. Maximize your efforts and the money that you can make.
So, hope you got some value from this. You got some data, go ahead and use it. Implement what you're trying to do for your home sale and hope you make some money!