Non-Conforming Real Estate: What Is It & Why You Should Conform

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It’s a question straight out of a Dr. Phil episode; how do I stand out while still conforming? This scenario is not a confused teenager though, it is a rehabilitated property. Real estate investors know the dangers of investing in a property that does not conform to the area; exiting the deal becomes very difficult.

How to Estimate Rehab Costs!

Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.

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What is Non-Conforming Real Estate?

In real estate there are several reasons a property would be considered non-conforming:

1) Non-conforming use – most local governments enact zoning laws/ordinances that regulate the use of property. As zoning requirements change, pre-existing structures are often grandfathered in. For example: if an area was zoned residential, the corner gas station would become a nonconforming use site because it does not fit the classification of property in the zone.

2) Appearance – the appearance of a property can also make it non-conforming. They are the houses that stand out like a sore thumb; the ones that make you scratch your head and ask “how did that get there”.

3) Size matters – in a neighborhood full of 3 bedroom/2 bathroom ranches, that 6 bedroom/2.5 bedroom McMansion would be considered non-conforming. Finding effective comps to determine ARV is difficult if not impossible.

4) Over/Under – The improvement level of a property is a key consideration for rehabbers. If you choose Italian marble floors in an area dominated by ceramic tile, you have over-improved the property, making it non-conforming. The same can happen in an area made up primarily of custom kitchens and exotic countertops if you install standard cabinets and laminate countertops.

If conformance is important to ensuring the widest appeal to buyers, how do you make sure potential buyers choose your property over others in the area that are, by definition, identical or very similar?

6 Keys to Massive Appeal

Start marketing during rehab:
We used to wait until our renovations were finished to market it, we didn’t even put a sign in the yard. We will never wait again. On our most recent rehab we put signs out in the yard immediately after demo and had people stopping by frequently. In fact, the eventual buyers visited the property during the first full week of work. They came back to check on the process often and loved seeing the transformation. There were very comfortable being able to see the property as it progressed and knew we were not simply making cosmetic improvements, we were actually adding value.

Make buyers feel better:
There is nothing buyers like more than knowing the electrical, HVAC, and plumbing are in good repair, so take care of these issues right away and make sure you market the property to highlight that advantage. This will go a long way in developing your reputation as a rehabber, especially in an age where many people are out to cover up as much as possible to make an extra buck.

Choose wisely:
Know what buyers in your market value the most. In general, kitchens and bathrooms bring the highest return on investment, but each market is a little bit different. Understand what buyers are looking for, what they are willing to pay extra for and what they could care less about. Find out what desirable amenity or item is missing from the area and find out if it will be cost-effective and worthwhile to include in your rehab plans.

Sweat the small things:
“We bought the house because we just loved the brand new outlet covers!” While that is a proclamation you may have never heard, do not discount the importance of the little things. Fresh light switch plates, vents, and outlet covers along with shiny hardware go a long way, and buyers notice. It encourages the notion “they thought of everything” while purposefully excluding these easy improvements begs the question “what else did they leave out?”

No more drive-bys:
When potential buyers are cruising through the neighborhood make sure they stop at your property, not the one next door. It is human nature to make many assumptions on a first impression, so make sure the assumptions made are positive ones. The landscaping should be clean and appealing and the outside of the house inviting. If the exterior does not pass the eye test, you are probably not going any further. Getting potential buyers in the door is half the battle, so win it right away.

The price is right:
The most motivating factor for buyers is price, so if your property is priced slightly lower than others in the area you already have an advantage. Many rehabbers try to get every penny out of their newly rehabbed property (often due to an emotional attachment), which typically results in more days on market and several price reductions (I know from experience). Price your property for a quick sale the first time and avoid the disappointment of few showings, low offers and eventual reductions.

It is a delicate balance to achieve, but a necessary one for rehabbers to master. Conforming is critical to achieving mass appeal while standing above the competition will ensure a quick sale. Next time you are getting ready to start a rehab project consider the ways you can make your property outshine the competition while staying within the area standards, bringing max return on investment while limiting time on market.

About Author

James Vermillion

James (G+) is a Principal Member of K&V LLC, a real estate investing company in Lexington, KY. His firm focuses on distressed property rehabilitation in the Bluegrass Region. He is also a licensed real estate agent.


  1. Thank you thank you thank you! What a great summary of the mindset of a residential flipper! With the myriad of different properties an investor looks at, following these “conforming” guidelines will save you time, trouble, and a lot of money. Great post

  2. Thanks, James.

    The part of this post that jumped out at me was the early marketing. Years ago, we had our properties leased out or sold early in the process. Lately, we’ve been waiting until they’re move-in ready to put a sign in the yard and start marketing. We’ll be re-visiting this tactic in our office next week.

    Well written. Thanks for stirring up the thought process!

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