There are a whole lot of renovated or ‘flipped’ houses on the market these days! The real estate industry is thriving in Richmond, and people know that there’s a lot of money to be made by buying an old beat up house, making it look brand new, and turning it around to sell in what is currently a very strong sellers’ market.
There’s a particular appeal in some of Richmond’s historic neighborhoods, where you can maintain some of the old, rustic charm while incorporating new, clean elements to make the home feel fresh, without being cookie cutter.
But with so many renovated homes on the market, it’s hard to know exactly what you’re getting. And if you’re buying in an area where the houses have been around for hundreds of years, you really need to know what was done to the home - and equally important, what wasn’t - to be confident in your purchase.
Examining the numbers
Sure, some renovators put particular care into their selections or know where to find a good bargain, but for the most part, everyone is working with the same materials, with contractors who operate on a similar model, and around the same general understanding of what buyers look for in a ‘flipped’ house. So knowing what the flipper bought the home for originally - something your agent can find for you - and what they’ve now put it on the market for can tell you a lot about the resources that went into the renovation.
Keep in mind, these are very rough estimates! But they’ll serve as a good baseline to know if the renovator is misrepresenting the home in any drastic way.
Quick surface renovations would run a renovator about $10-20 per square foot. This might include a fresh paint job, new lighting and plumbing fixtures, and maybe some updated countertops, but isn’t likely to include any repairs to internal systems like plumbing or HVAC - or anything that requires busting down walls, for that matter.
Once a flipper starts updating flooring, entire bathrooms, or making mechanical repairs, they’re going to move into the $20-$40 per square foot zone. The above, cosmetic repairs can likely be taken care of as well, though you should always pay close attention to the quality of materials used on things like countertops and updated light fixtures. Keep in mind, however, that with particularly historic homes, some ‘mechanical repairs’ might require higher level overhauls, which would push them up over this budget range.
High level electrical and plumbing repairs, a new roof, and even some floor plan modifications would likely run at about $40-60 per square foot.
Anything above $60 per square foot should be pretty extensive. All of the above might be included (depending on the specific needs of the home) plus brand new systems like plumbing, electrical, and HVAC.
Another thing to remember is that the cost of building a brand new home is somewhere in the $100-$150 per square foot range. So if the resell margins are pushing up into that range, you’ll want to do some additional investigating on why.
Again, those are just general rules to follow and should be used only to make some preliminary judgements on what kind of changes were made and/or whether the renovator/flipper is offering it at a fair price. You should, of course, get all the renovation information from the seller and your agent will help you comb through each of the changes to decide if the pricing is appropriate based on the work done.
So get all the information you can - ask a lot of questions, dive into the inspection report, ask for as much proof of work as is available, and lean into your agent. We’ve flipped a house or two in our day, so we’d love to help.