Do you want to sell your rehabbed properties faster and for more money? In this post you’ll learn an easy house flipping staging technique so good that once you hear it, you’ll wonder why you haven’t I been doing it already. It will save you thousands over the cost of a traditional home staging service.
This helpful tip will benefit homeowners wondering if they should hire a home staging company when selling their home. However, this is critical information for real estate investors because it will help you be more productive.
What is Home Staging?
Home staging is furnishing an otherwise empty home. This helps a prospective buyer get a feel for what it’s like to live in the house. Often people can’t visualize living in a space, so they need to be shown that. You may be the type of person that can walk into an empty space and envision something incredible, but not everyone has that gift. This is the reason why homebuilders have a fully furnished show home.
There’s a lot of misinformation about the benefits of home staging. Conventional wisdom argues that home staging increases the purchase price of a home. Backing up this claim, the Home Staging Resources Organization surveyed five thousand respondents in a 2018 study. They found that 85% of staged houses sold for 6% to 25% more than their non-staged counterparts.
But what does this really mean? Did the other 15% sell for less? I think this is an example of misinformation. Let me explain why.
- Not All Homes Are Identical: First, it’s hard to make an exact comparison between staged versus not staged. There are so many differentiating factors. Every home tends to be a little bit different, with varied layouts, different rooms sizes and other features.
- The Nicest Homes Get Staged: The reality that a lot of the homes being staged have the most potential. We think the staging increased the sale of the house, however that may not be the reason it sold for more.
- Sometimes the Furniture is Included in the Sale: This could explain the price increase of 25% in the study. Lenders prefer not to lend money on the furniture. For this reason, the sale of furniture is never mentioned in the MLS remarks or purchase contract.
So, staging may have nothing to do with the house being more attractive and selling for more. There are just too many variables to get a good comparison. It can’t be evaluated like a scientist in a laboratory.
Does Home Staging Increase the Sale Price of a Property?
I have plenty of experience with this from when I was basically my own home stager. I had furniture that I would store, and my crew would bring it out, put it into the house and then remove it when the house sold. I must say that I am not convinced home-staging improves the overall sale price of the property. It may somewhat, and I’ll share with you how, but to a great extent, it doesn’t.
Home Staging: Value vs Marketability
Value is what the property appraises for. Appraisals don’t have a line item that refer to home-staging, which means that appraisers don’t put any value on it. Some would argue that appraised value is whatever the seller and buyer agree to. This is true to a certain degree; however, appraisals are also based on comparable sales.
Marketability refers to how fast you can find a full price buyer. An advantage of home staging is that it does improve marketability by making a property more desirable and that can translate to value. Let me explain how. When selling a house, it is like a product launch. We try to price it low right from the start and then get a MOS: multiple offer situation. Getting several offers at the same time creates competition between buyers.
This has a psychological impact that can push the price up. I believe that it’s not the home-staging that pushes the price up but the multiple offer situation. The multiple offer situation is partly created by an improved marketability which is a result of the home being staged.
I have a video on this called subject called the Kiss of Death When Selling A House. In it I share about one of the costliest mistakes you can make; listing a property too high and then lowering the asking price when it doesn’t sell.
3 Disadvantages of Home Staging
1. Home Staging Doesn’t Always Create a MOS
I’ve had deals where the interior design was stunning and the furniture was perfect, and it still sold for the same amount as if I had no staging. This is because it wasn’t a multiple offer situation creating competition. So, the buyer’s agent went back to value and made an offer comparable to what the other homes in the area were selling for. Unless you have a multiple offer situation, in the end this is what buyers’ agents are going to refer to when advising their buyer to make an offer.
It can potentially cost thousands of dollars to professionally home stage a property. This includes the expense of the furniture and then the moving costs. You also need to hire an interior designer or have the skills of one to make sure the décor is attractive.
You also have the hassle of purchasing your own furniture, renting the storage space, and managing and paying a moving crew. Furthermore, you need more than one set of furniture because not all furnishings will be appropriate for all spaces. Apartments need apartment sized furniture, and some furniture won’t fit through doorways or up stairs.
Is it Worth It?
I’ve had a lot of people ask me if it’s worth the cost and hassle. In the past my answer has always been that the sale price of the home must be high relative to the cost of staging. This ensures that the cost is a tiny fraction of the overall sales price.
It important to keep in mind that homebuilders just furnish the model home to be more efficient and economical. So, my previous advice was always, if you can be efficient with your home staging, go ahead. If not, don’t stage because it’s not worth the extra up-front cost to do it. This leads us to this game changing tip.
Epic Home Staging Tip for House Flippers:
If the biggest problem is cost, then a solution would be to reduce the cost but still get the benefits. THE SOLUTION IS VIRTUAL STAGING.
What is Virtual Staging?
Virtual staging is when you have a professional photographer take photos of the house, then send them to a virtual staging company where they photoshop furniture into the pictures. This means you get the benefit of staging without the hassles and at a fraction of the cost. For high quality work they usually charge around $35 a picture. Although there are probably other good companies out there, I use Box Brownie. They were the first ones on the market, and they do a great job.
One reason virtual staging makes sense is that buyers are making their decisions when they are looking at the pictures on-line. Between the pictures and google street view, most homebuyers make up their mind about a property before they ever see it.
Virtual Staging is a Game Changer for Flippers
A perfect example of this happened with an apprentice of mine who was struggling to sell a home in the mountains. I advised him not to buy it because it had such a high price point, but he bought it anyway. After 90 days on the market it wasn’t selling, however he didn’t want to drop the price for fear of losing money.
He asked for my advice. He didn’t have money for a staging company, but he needed to get some furniture in the pictures. I told him about a virtual staging company I had heard about and suggested he give it a try it and see what happens.
In one week, it sold for just below asking price. Because the people who were looking at this mountain community were typically far away, the property sold on-line. The sale was made based on pictures first, and then they would come to see it later.
Use Professional Photos
I recommend you use professional photos. I have a photographer that works with a lot of real estate agents. For $150 to $200, she will take pictures of each one of my rehab houses, enhancing the lighting and colors so they look nice. Then, I send it over to Box Brownie where they add all the appropriate furniture. They also play the role of interior designer which is a bonus.
Be sure to represent your house accurately and not lie in the images. Don’t Photoshop in features that don’t exist, like a kitchen island. You can add furniture because furniture is movable and then put in the MLS notes, “There will be no furniture in the home at the time of showing.”
Virtual Staging for Homeowners
This epic home staging tip for house flippers applies to homeowners as well. Traditional home stagers are cringing right now, because this tip is taking business away from them. But the reality is that the pictures are where all the home-staging value comes from. People are making buying decisions before they ever show up to the house.
That’s why I believe in this epic home staging tip for house flippers. If you’re a real estate investor, unless you’re wholesaling from complete burnout, every single deal should be virtually staged. You’ll make more money and sell faster.