Faced with an ever-tighter housing market, some local brokerages are funding homeowners’ renovation projects as a way to secure more home sales.
When the coronavirus hit Massachusetts in early March, the illness and restrictions to contain it winnowed down real estate listings in the commonwealth’s already-tight housing market. Shortly into the pandemic, Carol Conway Bulman grew concerned.
“Listings had been down significantly year-over-year, and then during COVID they dropped even more dramatically,” said Bulman, who is president and CEO of Jack Conway & Co. She asked: “What’s another tool in the toolbox that we can provide our Realtors and our clients to help them move their properties quickly, and for the price that they want?”
Bulman’s answer to that question, Conway HOMERedi, launched last month. The program allows sellers to renovate their homes – and delay paying for the work until closing. The launch makes Jack Conway part of a growing cohort of real estate brokerages, including Compass and Coldwell Banker, willing to temporarily foot the bill for home improvements that keep housing stock moving and fetching higher prices.
In Greater Boston, such programs unfurl into a competitive market that is growing ever more so. According to data compiled by Zillow, typical homes in Boston spent 45 percent fewer days on the market, a reduction of 7.3 days, in August 2020 than they did last August. Homes that sold for less than $376,000 stayed on the market for 10 days in August 2019, but this August sold after 6.3 days. The most expensive homes (selling for more than $808,000) spent 24 days on the market in 2019; one year later they took just 13.67 days to sell – a 43 percent reduction.
Different Funding Methods
Before Jack Conway launched Conway HOMERedi on Sept. 4, Bulman had been researching such a program for a couple of years. Studies “have shown that buyers prefer to have the [option] of one-stop shopping, so all of the real estate services under one roof,” Bulman said.
Ultimately, the brokerage partnered with Massachusetts-based ReNoveo, a general contracting company focused on pre-sale renovations. Sellers must spend at least $15,000 on their homes through ReNoveo; there’s no maximum amount “as long as post-work the seller still has 20 percent equity,” said Al Becker, Jack Conway executive vice president and COO, via email.
ReNoveo secures a lien on homes in the HOMERedi program to ensure repayment. Ideally projects are ones “where… we can do the work for less than it will bring in the sale,” Becker said.
RealVitalize, Coldwell Banker’s home renovation program, works somewhat differently. The program, which is offered in partnership with HomeAdvisor, arrived at Coldwell Banker Realty New England in September 2019. HomeAdvisor is a digital marketplace of prescreened contractors. Sellers apply for the program, and as the work is done
“[Coldwell Banker pays] HomeAdvisor, and then the seller pays back those costs to Coldwell Banker at the closing…with no hidden fees or interest or mark-up,” said Pauline Bennett, president of Coldwell Banker Realty New England.
While the company has no detailed data for New England, Coldwell Banker reports from other markets that homes improved through RealVitalize sell 25 percent faster and 4 percent closer to list price. So far, 100 New England agents have used RealVitalize and 59 listings have completed at least one project through the program.
One of those was an older home listed in an area with new construction. After two weeks, the listing agent, Boston-based Jessica Quirk of Coldwell Banker’s Quirk Group, understood that buyers felt the property needed improving. The sellers were reluctant to do the work, so Quirk told them about RealVitalize.
“We had the kitchen painted white; it was [an] older darker brown,” she recalled.
After kitchen hardware and faucet upgrades and some light staging, Quirk put the house back on the market, “and we got an offer that very first weekend,” she said.
An Alternative to iBuyers
Quirk’s clients aren’t the only homeowners averse to doing upgrades that will align their properties with buyers’ expectations.
“Somehow the thought of getting their home ready to come onto the market seems overwhelming to them,” Bennett said.
Bulman sees that same feeling in some clients.
“Maybe there’s something that has happened that has just caused them to think, ‘I just can’t think of open houses and negotiations,’” she said.
That feeling sometimes leads sellers to iBuyers, she said. Services like RealVitalize and Conway HOMERedi offer “a good alternative to that, because it takes some of the stress off of [sellers],” Bulman said. In fact, two of Quirk’s clients who used RealVitalize “could have come up with the money themselves,” she said.
Some sellers face greater barriers to pre-sale home improvements.
“We can watch these home improvement shows, but actually doing the work … requires capital, and people don’t have that kind of capital [or] knowledge of how to get the work done,” said Charles George, a senior vice president at Compass’s Boston offices.
George joined Compass in March after owning his own brokerage for many years, largely because of the company’s Concierge program. In that program, sellers apply for what George likened to a bank or debit card with a $50,000 limit in the Boston area (that figure varies according to local economic conditions), then use it to pay for home improvements with the agent acting as a resource. Compass gets its money back at closing.
While some properties benefit from large projects – a new roof, major kitchen upgrades – readying a home for Boston’s uber-competitive market sometimes doesn’t take much. One of George’s clients used Compass just for staging. Most often, local sellers have used RealVitalize for painting, according to Barrett.
While interest in Conway HOMERedi abounds, Bulman is still waiting for the first seller to go through the program. It’s possible that a year in, she might express the same hunch about in-house repair services that Quirk did – a positive one for Boston’s perennially low housing stock.
“I think it absolutely would push people to sell,” she said.
