Pre-sell a house before renovation using floor plans/renderings?

Question

What has been your experience pre-selling flips by listing them before reno is complete? Listing would include high quality exterior & interior renderings, floor plans, description of finishes, plus something like "still time to choose your own counter tops, vanities, colors etc... home under construction and finished Sept." Have you had success doing this as FSBO on Zillow, just putting on MLS for fee, or listing with an agent?

ARV is $900K on this house (Summit NJ, train access NYC) and reno timeline is 3.5-4 months (we're dormering an unfinished 2nd floor to add master suite + 2BR + BA, gutting first floor, finishing basement). Plans are submitted to city, will start on "in-place" type reno next week for existing bath.

Goal would be to find a buyer early so that we can either sell as soon as it is complete, or even sell it now - bonus for buyer would be they can customize a bit if desired (e.g. here are your two choices we include in this price range. or pay more to get whatever custom version you want). Also the commission savings are substantial if we only pay a buyer's agent vs both. Would appreciate any insight from folks who have pre-marketed successfully!

Whitney Hill · Answer

Thanks for thoughts!

@Doug W. my partner is a well-insured licensed contractor & we have liability on the house, great call-out you make to have that covered. Also a good caution to try and limit the time spent with buyer - agreement would likely be they can pick from a pre-selected set of options (or worst case, my partner the builder is fine with managing the coddling part)

@Bryan Devitt agree, I've seen it done a lot around here as well. So I'm looking for ideas on best ways to execute, e.g. FSBO vs listing on MLS

Bryan Devitt · Answer

Builders and flippers do it around here (MA) all the time with new homes and flips in the higher end. It takes longer to sell them and those with money tend to want to pick out their tile, paint colors, etc more than those on the lower end. I don't have any personal experience doing it, but it is normal to me and most builders I know and follow have the majority of their projects sold before they're finished by doing it.

Doug W. · Answer

Hi Whitney,

I would caution you on a couple of items. First, if you "sell it now" and then continue to do the work you put yourselves and your buyer at risk as you will be acting as an unlicensed contractor. For you that means potential fines and for your buyer it could mean a denial of an insurance claim should something happen to the property or a person working on it. If you have a GC already working and you, instead, act as a consultant or designer then this point might be moot.

Second, do you really want a client that you have to coddle? Are you prepared to take him/her to the tile store, paint store, carpet store, countertops warehouse, plumbing fixture store, etc.?