Pre-Sale a Rehab inorder to customize to buyer

[Sharika L.]

All,  We have our first fix and flip under contract. A local and respectable contractor came to place a bid and really wanted to speak with us on how to go about rehabbing the house. Coincidently my main concern is over rehabbing/under rehabbing or really not gearing our efforts to the local population but instead what we like. The contractor actually suggested doing a pre-sale of the property and customizing the rehab to their needs.

We will have a followup conversation with more details, but from the short conversation all expenses will be on the buyer we would simply manage the rehab.

Anyone with lessons learned in this area?

[Michael Woodward]

@Sharika L.   The problem with trying to pre-sell a house that needs renovating is that most people can't envision the final look and feel of the house.  People that renovate their own house can do that because they've lived there long enough to know what it needs and how will look in the end but doing that with an unfamiliar house is impossible for most people.  When they walk in the house for the first time they immediately start creating their opinion (consciously and subconsciously).  The homes problems and deficiencies can turn people off and they won't consider buying it.  

I think you will be more successful in the investment if you get lots of advice from local home decorating professionals, real estate agents, and others that deal with home buyer's needs and desires.  Real estate agents are probably your best source because they're constantly hearing what people like and don't like.

Another serious consideration is dealing with the sales contract and how it encompasses not only the sale but the renovations.  The water can get really muddy when you have a very complex situation like that and opportunities for the deal to fall apart grow exponentially.  In the end you could end up having to try to sell a house renovated to someone's personal taste that everyone else hates.

I would personally never pre-sell a house this way.  I want the cleanest (and shortest) interaction with the buyers I can possibly have.

Good luck!