The ONE Question That Will Change Everything You Think You Know About Home Staging
The first question we’re often asked is, “So how much would you charge to stage this house? Just a ballpark idea would be great!”
Our answer is often a very unsatisfying, “Well, it depends.” Because it DOES depend on a number of factors, such as :
How many rooms do you want to stage?
Who is your target buyer?
What do you plan on listing the home for?
How long (in months) do you want your initial rental term to last?
It’s not that the question of price is a bad question - budget is a consideration in any buying decision. But it’s not the right FIRST question. If you want to determine whether staging would be worth it, price is just part of the equation.
THE TRUE COST OF CHOOSING YOUR STAGER BASED ON PRICE (YOU GET WHAT YOU PAY FOR)
Staging is not a low overhead business. For each stage, we’re planning, preparing, and moving an entire house-worth of furniture and accessories (twice) and magically setting it all up perfectly to be ready for pictures the next day. Sometimes even the same day.
Except it’s not magic - it takes a significant amount of coordination, people power, and expertise to pull it off. It takes curating and maintaining a specific set of inventory to have the right pieces on hand for your listing BEFORE we’re contacted for a quote. It takes a deep understanding of buyer psychology. It’s most definitely not magic.
In order to produce a high quality staging that will connect with buyers and inform buying decisions - and maintain a sustainable business - staging has to price accordingly. If your stager is providing a quote that seems too good to be true, it probably is. It’s like the old saying, “Good, Fast, Cheap - pick two.” Generally speaking, stagers are all faced with the same cost categories. When a staging is offered at a low price, something has to give. Any one or combination of the following may be happening:
Sacrificing Inventory Quality: This is a big one. Maybe they’re sourcing the majority of their inventory from Facebook Marketplace, resulting in dings, nicks, and pieces that look second-hand. Maybe they’re buying new but it’s what we refer to as “camping furniture” - small, incredibly lightweight, mostly see-through, and (above all) extremely low quality. Maybe they’re not regularly purchasing new inventory to ensure their stagings look fresh and current. Regardless of the reason, staging this way actually devalues your listing, resulting in low or no offers. The road to top dollar offers comes by way of showing buyers the life they want to live, not the life they used to (or worse, would never) live.
Sacrificing Operational Quality: Maybe they’re not using professional movers, which places your listing and clients at risk. Maybe they don’t invest in training and professional development. Maybe they’re underpaying (or not paying) their team. Maybe they’re not properly insured. All of these result in greater risk for you and your client, along with a diminished ability to deliver a professional, high quality staging.
Sacrificing (Reasonable) Profit: Staging is a business - it’s not a hobby, and it’s not a charitable enterprise. Just as with any other business, stagers need to turn a profit to both stay in business and invest in new inventory, keeping your stagings fresh and at the forefront of what buyers want to see. Profit is important to your stager’s sustainability and business practices.
THE RIGHT FIRST QUESTION: WHAT’S THE ROI?
What will completely change how you perceive staging, help you evaluate the difference of one stager to the next, and improve your bottom line is the mental shift from “What is the upfront cost?” to “What is my return on investment (ROI)?”
Just to level set and make sure we’re all on the same page, your ROI is the profit you make as a direct result of something you purchased (because your purchase is an investment in your future profits), measured as a percentage of what you paid for it. For example, let’s say you’re a house flipper who buys a property for $100,000 (clearly not here in the Boston area, but let’s make this super simple.) If you invest $50,000 in improvements and are able to sell it for $300,000, your ROI is 100%, because:
$100K purchase price + $50K in improvements = $150K total investment
$300K sale price - $150K total investment = $150K profit
$150K profit / $150 total investment = 100%
When it comes to staging , ROI is often measured in the hundreds of percentage points - which is kind of mind blowing. According to RESA (Real Estate Staging Association), the average ROI on home staging in the United States is over 400%, meaning for every dollar spent on staging you’d see an average of a $4.00 in return. And since this is Boston area real estate we’re talking, where our home values are significantly higher than the national averages, that 400%+ average adds up quickly.
For a luxury listing, it’s not uncommon to invest $10,000 in staging. Therefore, on average, the seller can expect an over $50,000 increase in the sale price as a direct result of that staging, or over $40,000 of profit directly attributable to staging. On AVERAGE. With the wrong staging it will be less but with the right staging, it’s often more.
HOW DO YOU MEASURE (OR PREDICT) THE ROI OF YOUR STAGING?
Predicting ROI, can be tricky - especially when it comes to home staging. However, there are four questions to ask that, when considered together, can help you determine what the potential ROI of any staging project would be:
What will my listing price be?
Selling a $500,000 property is very different than selling a $5,000,000 property. Considering your listing price point with regard to your staging ROI is key, as higher priced properties not only have higher carrying costs (which we will address below), but also more significant price reductions.
For multi-million dollar listings, each price reduction is likely to be in the five or even six figure range and if your staging fails to connect with your buyers, you’ll be facing price reductions. When listings are priced properly, high quality staging can help protect against the need for price reductions and preserve your property’s market value.
The cost of investing in high quality staging is typically less than 10% of the amount of your first price reduction. When considering the ROI of staging, think about how much that potential first price reduction would be - and what it would be worth to you to prevent it.
*Disclaimer* - As with any consumer good, the combination of pricing and presentation together create the demand for your property. Even with the best staging, if your listing is priced higher than the market will bear you will be facing a price reduction. However, proper staging will ensure your listing doesn’t drop any lower than necessary. Good staging compliments and enhances a proper pricing strategy.
What are the carrying costs of my property?
High-quality staging ensures your listing will sell as quickly as possible. Oftentimes, properties sell within the first week on the market because good staging creates a FOMO effect.
If you’re a builder or seller, what are your monthly carrying costs for the home? How many more months are you willing to continue to pay that carrying costs while your property sits on the market?
If your monthly carrying costs are $5,000 and the average home in your area is closing in 90 days, that’s approximately $15,000 in carrying costs while your property is on the market. With proper staging, your home could go under agreement in the first week and close in 60 days. Your carrying costs are now $5,000 lower than the market average AND you haven’t needed to take any price reductions (see above). Positive ROI.
If you’re an agent, your “carrying costs” are somewhat different, but they’re still a factor. What do you anticipate spending on marketing this property, in both hard costs and your time? If the home stays on the market for several months, how many open houses do you anticipate holding? How many non-productive showings will you attend? What additional marketing costs will you incur?
If your staging doesn’t meet or exceed the desires of your target buyers, it will take longer to sell the property - and each additional day comes at additional costs to you. Investing in a higher quality stager ensures your carrying costs will be as low as possible.
How much more will I get for my property with proper staging?
We see it all the time. Before staging, we always ask what the house will be listed for, and agents are typically VERY sure of their go-to-market price. Then we stage, the listing goes live on MLS, and we see it’s listed at $50,000-$100,000 more than they’d previously stated - and then it sells for $100,000 above ask.
The reality is staging impacts the perceived value of the property - and how it impacts that perceived value is a matter of how well the staging aligns with your target buyers. Stagings below your buyers’ expectations will devalue your property, while staging at or above your buyers’ expectations will increase the value of your property. Agents know this and will list the property for more than anticipated after staging, if they think the staging is amazing and it aligns with their marketing strategy.
But the asking price is just that - an ask. Staging that shows your target buyers the lifestyle they badly want to live will increase the value they perceive your home to have - and encourage them to make higher offers as a result. And that’s the name of the game.
How much does the staging cost?
The quoted price and staging terms should only be a determining factor when comparing two stagers of equal quality. Trying to compare a lower quality stager’s and higher quality stager’s quote is like apples and oranges - they’re both fruit, but that’s about it.
Any stager can use the term “luxury staging” - so how do you determine the level of quality from one stager to the next?
Look at their portfolio. Does the furniture fit the space? Does it look high quality (although photos can be deceiving in this area)? Look at the images very critically - if you were a buyer with the means to pay for this home, would you want to live in this staging or would it not feel high end enough for you? Start with the portfolio, but don’t end here.
Get Referrals. Talk to other agents who have worked with that stager. Agents know where it’s at.
Listen to your agent. Your agent is in the boat with you - the higher the house sells, the more they benefit, too. Heed their advice and let their experience work for you.
WAYS TO REDUCE UPFRONT COSTS WHILE PROTECTING YOUR ROI
When working with a high quality stager, there are a few ways to reduce your staging costs while protecting your ROI:
Stage only high-priority rooms: Not every room has the same ROI. High value rooms are the rooms where buyers will linger - or where you don’t want them to linger. This includes the living room, family room, dining room, kitchen, primary suite, anything visible from the entry, and any room with an obvious buyer objection (ie: a bedroom that doesn’t look big enough for a bed.)
Ask for different terms - This won’t always be an option, but sometimes you can negotiate a shorter initial rental term that will reduce your upfront staging costs. If you think the home will sell very quickly but your stager has a standard 3 month initial rental term, ask if they can offer a one month or two month term. Be aware your monthly rental (and renewal) cost may be higher, on average, with a shorter term - but it’s a calculated risk you may be willing to take. If your stager also thinks the home will sell quickly (and they could flip the inventory to a new client) it may be worth it for them, too. As long as what you’re asking for would be a win/win, there’s no reason not to ask.
THE BOTTOM LINE
Using price as your determining factor when selecting a stager without considering ROI is a profit buster. Use ROI to ensure you’re getting the most for your staging at a reasonable and equitable upfront cost - but, over all, ask yourself this: is this stager going to make my life easier? Will I maximize my ROI, be able to sell and move on quickly, eliminate headaches, and keep my clients happy (if you’re an agent)? Because, ultimately, real estate is a relationship-based business, and sometimes ROI is measured not just in numbers, but also in peace of mind.
