Risky business of renovation: What happens when ‘Unsellable Houses’ lose value?
LOS ANGELES, CALIFORNIA: On 'Unsellable Houses', Lyndsay Lamb and Leslie Davis face significant risks when undertaking renovation projects aimed at increasing a home's market value. The process begins with a substantial investment by the hosts to renovate the property. If unforeseen issues, such as hidden sewer problems, arise during the renovation, they can lead to additional costs and delays. These unexpected expenses can negatively impact the final selling price of the home.
When the house is eventually sold, the profit-sharing structure between the hosts and homeowners comes into play. If the renovated home sells for more than its estimated pre-renovation value, the hosts first recoup their investment. Any amount beyond the original expected sale price is then split 50-50 with the homeowners. For instance, if a home would have sold for $550,000, the hosts would receive the entire amount if the house sells for $550,000. However, if the final selling price is $650,000, the hosts and homeowners would split the $100,000 increase equally.
On the other hand, if the renovation costs surpass the increased sale price or if the house sells for less due to newly discovered issues, the hosts may face financial losses. They might not recover their initial investment, especially if the final selling price fails to cover the renovation costs. In a situation where the house does not sell within six months, the homeowners retain all profits, even if the renovation did not result in a higher selling price. This arrangement ensures that while the hosts bear the risk of renovation costs and potential losses, homeowners benefit from any potential profits or avoid additional costs if the home remains unsold.
Lyndsay Lamb buys her own renovated house as ‘rental property’
Lyndsay Lamb made a surprising decision that caught the attention of fans, as in a recent episode titled "Historic Home Rescue," Lyndsay and her twin sister, Leslie Davis, took on the challenge of renovating a 1906 home in Everett, Washington. The house, owned by a client named Annie, had been struggling to sell at the $390,000 asking price, largely due to its outdated 1970s decor that didn’t match its classic Craftsman style.
Armed with a $60,000 renovation budget, Lyndsay and Leslie set out to modernize the home while preserving its original charm. They removed an awkwardly placed first-floor bedroom and bathroom that had been added by the previous owner, freeing up space for a larger living room and a new dining area. They also added unique touches like a transom window over a closet door, shiplap on the kitchen ceiling, and modern tiles in the bathroom that echoed the home’s original design.
The renovations were so successful that, by the end of the project, Lyndsay and Leslie decided they didn’t want to let the house go. They were so impressed with the transformation that they made an offer to buy the house themselves, intending to use it as a rental property. The offer was $515,000—$15,000 more than their estimated selling price—and Annie happily accepted. This decision not only gave Lyndsay and Leslie a new rental investment but also provided Annie with a successful sale, making the renovation a win-win for everyone involved.
Lyndsay and Leslie lose $70K due to sewer issues on ‘Unsellable Houses’
On the latest episode of 'Unsellable Houses', twin sisters and real estate experts Lyndsay Lamb and Leslie Davis faced a tough situation that led to a significant financial loss. They were working on a home renovation project, investing $150,000 to transform the property into something market-ready. However, just as they were preparing to sell, they discovered a major problem: the house needed new sewer lines, a repair that would cost an additional $90,000.
The problem was bigger than they initially thought. The sewer issue meant that the house couldn't pass inspection, which is a critical step for most buyers who rely on conventional loans. Without a functional sewer system, the property wouldn't qualify for these loans, narrowing the buyer pool to only those who could pay cash—a much smaller and less competitive group of potential buyers.
Facing the dilemma of either pouring more money into the project or selling the house as-is, they opted for the latter. The house, originally listed at $900,000, ended up selling for $780,000. This was $80,000 more than what the original owner expected, but for Lyndsay and Leslie, it meant a net loss of $70,000 after accounting for their renovation costs.
'Unsellable Houses' releases September 4, at 8 PM on HGTV