The Investment in Staging Your Home is ALWAYS Less Than Its First Price Reduction
Hi everyone. I have not had much time to do any blogging recently – thanks to all of you who have kept me busy – but wanted to take some time and write on the cost, or what I like to call the Investment of Staging.
From my discussions with many a Realtor, I have heard it mentioned more than once that although Staging a listing might sound like a great idea, their Seller just can’t afford to do so.
In response to that, I always say, the seller cannot afford to not Stage their home for the following reasons:
- Once a house goes to market, it becomes a product, therefore in order for it to sell Fast and for TOP Dollar it needs to be Merchandised ( i.e. Stage it) so it appeals to the broadest buyers;
- The way you live in a home and the way you sell your home are two different things. That means, among other things, vacant properties are not going to sell fast either, simply because they have no “soul” about them, and the buyer is unable to make an emotional connection with them. No Emotional Connection = No Offers;
- The cost of Staging a home is ALWAYS less than the first price reduction. It’s all about showing the numbers to the Sellers and doing the math so to speak. I have yet to talk to a Client/Seller that refused to have the property Staged, after I went over the numbers with them. And the fact that they have gotten offers after being on the market for 3 days or so is proof that Staging works. When working in collaboration with REAs and Sellers I always ask these two things: a-) what price range they perceive the property to be at or list at; b-) who the target buyer is.
I then Stage the property (package it, merchandise it) in such a way that the Staging design does and will appeal to that specific target buyer, in that specific price range. By Staging the property, the Realtor/Seller are confident on determining where in that range, the property will fall; which 100% of the time, it’s on the higher end of that spectrum as it should be. Staging does add on average 5%-20% perceived value to the property.
Now back to my point about showing the numbers and doing the math:
- Zillow states that the average home takes 1% in price reductions per month if not sold
- Trulia states that the average price reduction during the listing period is 9% for homes under $2M, for homes over $2M it is 14%
- The Real Estate Staging Association (RESA) states that the average DOM reduction is 78% for staged vs. non-staged homes
- Stagedhomes.com states that 94% of ASP Staged homes sell in 29 days and up to 45 days or 2 months. Un-Staged homes on the other hand are on the market for an average of 263 days or 9 months
For example purposes will look at a property with a Listing Price of $250,000.
Cost to Seller when the property is NOT Staged:
– Since Un-Staged properties stay on the market an average of 9 months or so and assuming monthly mortgage carrying costs of about $2,300/month, that would cost the Seller an additional $20,700 ($2,300 x 9 = $20,700)
– Average price reduction is about 1% per month so, $2,500 x 9 = $22,500
Cost to Seller when property is NOT Staged: $43,200 ($20,700+$22,500)
Cost to Realtor when the property is NOT Staged:
– Commission before Price Reductions: $250,000 x 3% = $7,500
– Commission after price reduction: $227,500 x 3% = $6,825
– Cost to Realtor: $7,500-$6,825 = $675
– Add to it the opportunity cost and another $250 or so a month ($250 x 9 = $2,250) in Marketing Cost
Total average Cost to the Realtor is $2,925 ($675+$2,250)
And now for the Savings that both the Seller and the Realtor realize and how Staging is an Upfront Investment worth making:
– Knowing that Staged homes sell in about 29 to 45 days in the current market – translates into about two months of mortgage carrying cost to the Seller ($2,300 x 2 = $4,600)
– Staging Investment of $175 to $3,000 (consultations start at about $175, and Vacant Staging projects for properties in the $250K price could go up to $3,000)
Total Cost to Seller if Property is Staged = $7,600.
So, when it is all said and done, is Staging worth it? Absolutely, enthusiastically “Yes”. The net savings in this example is likely to be around $35,600 for the Seller and about $3,000 in additional commission money to the Realtor. Eventually, with or without Staging, money will be spent. The question is how much and for what? Will it be spent in additional mortgage costs, price reductions, money brought to the closing table, continuous monthly Marketing cost, or Staging it and actually selling it now, so you EARN MORE MONEY?
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