There may be little debate that staging helps sell properties, but how important is it and what value does it really return? To answer this, I first want to explain the types of mise-en-scène that I have used and their results.
The first is what I call “minimal” staging or Stage 1. This is where the owner or investor wants to do minimal work on the property and wants the best possible return for their money, except they don’t want to spend anything serious. cash. If an investor is going to wholesale the property, the most important thing he can do is clean up the property and the surrounding yard. The average wholesaler is only interested in moving the property and almost never does anything to clean it up before showing it to potential buyers. This cleanup is more noticeable on REO properties and gets you more money than if the property is left in a junky condition.
As an estimate, this minimal cleanup and trash removal should add $2,500-$5,000 to the property’s price or 5% of its Fair Market Value (“FMV”), whichever is greater. You as a seller still have to face the prospect of a buyer rehabbing the property for sale to an end buyer or holding it as a rental, so it can only be marked as a wholesale deal.
If the property owner wants to sell the property wholesale to a retail buyer (“wholesale outright”), they must do more than simply clear the house and grounds. Aside from any obvious rehabilitation needed to sell the property to pass lender or local code inspections, he must do extensive patching and painting of the interior and exterior of the property. If you go the extra mile to maximize your yield for a little extra cost, doing some gardening would help. This amount of cleaning and repairs can take a property to the next “stage” very quickly and only time to maintain the property due to curing can be considered.
When the seller has actually completed all the work and is ready to start showing the property to show prospective buyers, they should move on to Stage 2 of the preparation plan. Stage 2 planning includes making the property appear lived in but bare of furniture, hence a bare staging. Specifically, in the bathroom(s) there must be at least one brightly colored shower curtain, wash clothes and towels. Some accessories like a soap dish and flower arrangements whenever possible will help. I estimate it should cost $200 – $500 for the entire interior of the property and should return an additional $5,000 – $10,000+ at the final sale of the property. Many of these “accessories” can be used in the investor’s next sale.
The kitchen is the main selling feature in most properties, so it should have a ‘cosy’ look and not have a cluttered counter top. Avoid having a toaster, blender, microwave, or any other minor appliance in the kitchen. You can plan for prospects to open the fridge and look inside the stove if they’re serious buyers, so clean these large appliances ahead of time. Leave bottles of water in the fridge for guests, but don’t store or allow children to drink anything that could stain your carpet or tile grout.
We typically use artificial plants above kitchen cabinets, but live hanging vines work well for color as well. Artificial flowers well placed throughout the property, even in the corners of the rooms, are very effective in breaking up the scarcity of open areas. Furniture should be kept to a minimum unless you decide to move on to the next and highest level of staging – Stage 3.
Stage 3 is where a lot of money can be spent and where the seller receives the most benefits. In this type of staging, the seller coordinates furniture and accessories in each room of the house. This can quickly get out of hand, especially in luxury properties. Getting it sold fast and at the highest possible price is critical. This type of “full” staging can add 7.5-10% to the “value” of the property, but more importantly, it will often make the property sell faster.
In Stage 3, your budget can spiral out of control very quickly if you’re not careful. So stick to a budget related to the price of the property. If your property retails for more than $400,000, it is suggested that the seller approach local furniture stores and ask them to place their furniture on the property and the seller will offer it as “furnished or unfurnished”. In some cases they will want some compensation and a guarantee that there will be no damage when the furniture is returned.
When we do a Stage 3 event, we like to keep our budget at about 1.5% of the sale price: an expected sale price of $400,000 should cost around $6,000 for furniture rental for the sale event and a $300 – $500 monthly rental fee. Check local staging companies because they can be very marketable depending on the local real estate market. Local shoppers can be very ethnically diverse, so don’t get stuck choosing your “motif” to fit a certain ethnicity; otherwise, it will set up to kill the deal instead of helping it.
In our personal rehab and retail experience, we have predominantly used Stage 2 staging and in a “good” market, as that was all it took to get past FMV. In today’s unstable market, it may require you to do something between Stage 2 and Stage 3 for it to work. In the past, we have installed 42″ to 60″ LCD TVs, Plasma TVs and Projectors and offered them as part of the sale at the full asking price. The worst thing that happened was that we sold the TV for $100 over what we paid and the buyer took the property at our asking price anyway.
Some sellers remodel their property just before the sale and take the furniture if it cannot be sold with the property. Just remember that your buyer may want what they see in the property so much that it could be a great deal if you don’t sell it to them (light fixtures and ceiling fixtures are very common items of contention, and antique tables, chairs, and headboards).
In short, there are three levels of staging properties. These dollar commitment levels depend on your exit strategy and how much money you want to spend. The gains are generally worth the money spent with price increases, so always consider some level of at least one cleaning or more staging for your property to increase your profit on sale.