Homes that have been fixed up tend to sell faster and for more money compared to homes that need fixing up.
However, some homeowners prefer to sell their home as-is rather than dealing with the hassle of getting it ready to sell.
Michael Alladawi, the chief executive and founder of Revive Real Estate, mentioned that people are hesitant to renovate their homes due to past bad experiences and the stress involved. He emphasized that many have heard horror stories of renovations taking longer and costing more than expected.
Alladawi believes that these sellers are missing out on potential profits by not fixing up their homes before selling them.
Revive Real Estate, which was established four years ago, claims to simplify pre-sale renovations.
Revive assists homeowners in evaluating the costs and potential value of upgrading kitchens, bathrooms, and floors. If the renovation is projected to increase the home's value significantly, Revive connects clients with contractors and oversees the construction process. They even finance the work and get reimbursed from the sale proceeds.
If a homeowner needs quick cash, Revive is willing to purchase the home at 80% of its value and use the remaining equity to cover renovation costs. After the sale, Revive provides the owner with a second check, giving them their share of the profits minus renovation costs, closing costs, and a 6% fee.
Since its establishment in 2020, Revive has expanded its operations to Texas, Florida, Washington, and Tennessee. The company has renovated approximately 2,000 homes, with most of them located in the Bay Area and Southern California.
We recently spoke with Alladawi to learn more about his company and the advantages of updating homes for sale.
Q: What inspired you to create this company?
A: The goal is to streamline the process of home flipping for consumers. By flipping, I mean strategically updating your home to maximize its selling value.
When homeowners sell their homes without maximizing their value, they typically leave about 15-20% of the potential sale price on the table.
In California, this percentage translates to a significant amount of money, especially for million-dollar homes, due to the aging housing inventory.
The majority of homes were built in the '70s, '80s, or '90s, making them outdated, even those from the 2000s.
Many homes are outdated and could benefit greatly from strategic upgrades.
Q: Why don’t more sellers renovate their homes?
A: There has been very little innovation in the renovation space. Contractors still rely on outdated methods for contracts and material acquisition, which causes inefficiencies.
The contractors that homeowners hire are generally capable but need better support and resources.
In essence, Revive can handle all the administrative tasks for contractors, allowing them to focus solely on the construction work.
Q: How exactly does your service work?
A: We assist with evaluating, planning, and carrying out the renovations.
First, we evaluate the potential value of a home after renovation and the current value of the home.
Is there a difference between the value after renovation and the current value?
Sometimes there is no difference. Perhaps you already have a very nice house. And sometimes the difference is significant.
The next step is planning. Once you realize there is an opportunity to increase the value, you need to decide on your scope and budget.
Are you planning to paint or replace the kitchen? Are you going to renovate all the bathrooms or just one? Will you refurbish the floors or replace them?
And then the third part is the execution.
Revive helps homeowners figure out these details and then matches them with a contractor who is reliable and can reliably carry out the project. Revive pays the contractor upfront, so you don't have to until your home sells.
Q: How do you make money?
A: We are providing support to the contractor, and for that, we charge the contractor a fee. Revive buys that contract. In exchange for giving them money upfront, they give us a 3-5% discount.
Revive only takes on projects in a market where homes sell in 60-90 days or less, and we only take on renovations that can be completed in 60-90 days at most.
We keep it simple. Cosmetic renovations that can be done over the counter at city hall are the biggest value-add items. Kitchens. Bathrooms.
Q: Does Revive build ADUs (accessory dwelling units)?
A: Not currently because we haven't figured out how to do it in 90 days or less.
Q: What does a typical job cost?
A: Our average budget for renovation is $80,000 to $160,000. And the average scope includes a new kitchen, a couple bathrooms, floors, baseboards, and paint.
Q: How much can remodeling add to the sale price of a home?
A: Typically, 15 to 20%. That's the amount of value we're adding to the homes we've remodeled.
A good guideline for consumers is if you can get $2 out for every $1 you put in, it's a good deal.
Q: What are the most common difficulties when remodeling your home?
A: Finding and vetting a contractor is very challenging for the average consumer.
They all use different contracts and write their bids in different ways. Sometimes it's really difficult to understand what's included and what's not included in a bid.
Sometimes the lowest bidder ends up costing the most because it excludes many necessary things that you may not be aware of.
The cheapest contractor is the one who gets hired. Contractors have figured out how to manipulate their bids to appear cheaper by excluding things that they know will need to be added later.
That's why it's common to hear people say their budget doubled. Yes, because they chose the cheapest bidder who excluded necessary items.
Michael Alladawi Profile
Job Title: CEO and founder
Organization: Revive Real Estate
City of Residence: Irvine
Education: Bachelor's degree in biology
Previous jobs: Manager for One Legacy, president of Umbrella Capital Group, broker at The Plaza Group Realty.
