buyers choose finishes?

Question

has anyone ever tried this? basically do the rehab 100% on the outside,so it has nice curb appeal. do all work inside to the point where you have drywall up and primed white. then market as starting at your lowest price with builder's grade finishes or better depending on buyer's budget and taste. have them sign a contract and give a sizable deposit and finish to their liking?

Manolo D. · Answer

Why not, sell the house as is (or not? be sure to make money at this point if you do), let the buyer buy materials, you charge labor. For labor, you should have the contractor maximize charges then you charge that plus a little to the client, if contractor can charge less for a much less complicated job, the savings goes to you. To protect yourself if buyer backs out, impose a re-do, restore, revert, or demolition fee for installed materials and have it reverted back to the "as is" condition. A pain in the butt to draw the contract but just being creative without thinking consequences, just contributing.

J Scott · Answer

That assumes the higher-end finishes are going to appealing to other buyers.  Trust me, many (most?) buyers, when given the choice of finishes, will pick things that aren't necessarily appealing to others.  Remember, higher-end doesn't mean more easily sellable.

So, you may break even on the cost, but still have to redo a lot of work...

Cameron Skinner · Answer

when I build spec homes after sheet rock I let them chose colors from pre selected items such as granite and tile and I say approved paint colors usually a grey, beige, and brown tone.  Your suppliers can get you samples Never send them to the store they will inevitably pick something back ordered that will delay your job or not be able to decide with the endless selection.  Also I find people are much happier when their selections are limited to 3or 4, as it's easier to decide.  Lastly even with a big deposit make sure you stress approved paint colors if they are dead set on painting purple then make sure you hold deposit not the title company and make sure you have enough to repaint if they back out.

Mary Shea · Answer

If, as @Chris Field mentioned, they put down a deposit equal to the upgrades, AND sign an agreement of intent with a clause that if they back out, they get none of their deposit back, you win if they back out. You have higher end finishes, that drive the price up, that someone else paid for.  It would be worth it to me to paint a few walls to get free upgrades.

Chris Field · Answer

Its a PITA. Unless your dealing with high end homes, most low end buyers have no money. Since they all watch to much HGTV they want that on a spam budget and will squeeze your margins to get it.

As said above you need to get a large deposit. On custom new builds I take a hefty none refundable deposit, the last one I just finished was $100k. Buyers do for a verity of reasons flake out, and if your doing custom stuff you need to be compensated for that.

Jeffery Waicak · Answer

good point, I feel you may be able to charge a bit of a premium because they are getting exactly what they want. but I think part of flipping is in the art of finding inexpensive things look more expensive.

J Scott · Answer

What if the person had backed out of the deal?  You would have spent considerable time and money putting the house back to beige and neutral for your next buyer.  Now, if you can get a considerable deposit, it might be worth the risk, but generally speaking, most buyers aren't going to put down a large enough deposit to make having to redo all the finishes worth the hassle.  You may not lose money, but you'll lose time, which in many cases is more valuable.

Rob Brautigam · Answer

This is an interesting and creative idea that might attract some buyers but might also deter others.

I agree with @J  Scott on the fact that you will end up netting less by using this technique. For example, priming and painting the sheetrock would typically be completed by the same contractor. By priming first, and then potentially waiting a month or more to paint the interior would for sure be a hassle to the painters, costing you more at the end of the project.

Jeffery Waicak · Answer

i agree, just kind of thinking out loud. I did this once with someone I knew and it went well. the house turned out far from beige and neutral and she loved it.  But to do that on the open market idk.

J Scott · Answer

Yes, you can do this, but make sure you have the same types of contracts in place that a custom home builder does -- that way, when the buyer flakes, or claims that you didn't do what was agreed or changes his mind, etc., you have legal recourse.

Personally, I think this is a bad idea unless/until you have a good bit of experience.  In addition, you'll find that most buyers are very bad at envisioning the finished product when the house is not completed, and you'll end up netting less than if you just finished the house and listed it when it was complete.