Home Staging: Is it Worth the Effort When Flipping Houses?

There’s nothing in this world so good it doesn’t have to be sold. Common sense says that when you put something – anything – on the market to be sold, you want to present that thing in the best light possible.

That’s all the more true when we’re talking about high-ticket items like a home. A hundred thousand here, a hundred thousand there, pretty soon, you’re talking about real money!

So let’s talk about what home staging is. In its simplest form, home staging is the process of cleaning the place up to look great for the buyer. The theory is that the buyer will pay more for a house that seems ready to move into than a house that they know they’ll have to do some work on (this concept, of course, drives the whole house flipping strategy).

But done well, home staging is more than that. Home staging is the art of taking a bare home and presenting it to the potential buyer in such a way that they want to live there. The skilled home stager takes things beyond painting, cleaning and furnishing, and helps the buyer actually envision raising his or her family in the home. The expert home stager furnishes and accents each room to help the potential buyer see the utility and value in every room, and creates a powerful feeling of warmth and comfort.

Remember the Psychology of Selling

Expert salespeople know: You sell the sizzle, not the steak. Sell benefits, not features. If you are trying to sell a spacious 25 by 35 foot kitchen on its size, and the modern appliances, you’re in trouble. You don’t add any value for the buyer. But if you sell the benefits of the large kitchen with modern appliances – the meals you can cook with and for your family, the shared experiences of teaching your children how to cook, the entertaining you can do with friends and loved ones, you can bring a powerful emotional factor to the closing table.

It’s not enough to get the buyer to think the home is a good deal for the money. Make the buyer want to live there.

Don’t make him think the house is a bargain. Make him want it!

Clean-Up vs. Home Staging

Obviously, you can do a lot of this yourself, or with the help of a couple of friends. However, there are actually people out there who stage homes for a living. They go take seminars and special certification courses in it, and then hang out a shingle as a home staging consultant. They even have an International Association of Home Staging Professionals. In baseball terms, think of them as the short-relief pitchers of the interior design world. In fact, the profession as we know it – as an institutionalized body with its own guild and professional standards – evolved from the work of Barb Schwartz, a former interior designer herself, originally from Bellevue, Washington. Ms. Schwartz has developed a course called the Accredited Staging Professional Course, which the IAHSP offers to its members and prospects.

Good professional home stagers put a lot of time and effort into understanding what helps a home sell at the best price, and what is luring shoppers and turning them into buyers.

This is a very different skill than doing an interior makeover to please the owner. The owner has specific and identifiable tastes and will likely be there for years. The home stager has to anticipate the average taste. The best of them are masters of neutral tones and general purpose furnishing – not too modern, and not too antique. They set a balance to reach a cross-section of popular tastes.

Note: Anyone can get a certificate for showing up to a class for five days. Some stagers will be better, more creative and more insightful than others. The best way to find one isn’t through the yellow pages and via the web, but through the word of mouth referrals of other successful investors and sellers who have sold a number of properties themselves.

Return on Investment Considerations

Does home staging make sense from an ROI perspective? The answer seems to be yes – but you have to be able to recognize the point of diminishing returns when you get there. According to the 2012 HomeGain Home Improvement Survey – a survey of 500 real estate professionals, staging was considered the fifth best thing you could do as a seller, on average, to add value to the property. The editors listed home staging as a separate activity, distinct from the no-brainer stuff like cleaning and decluttering.

Specifically, HomeGain’s survey found that those who used home staging techniques spent an average of $724, but the effort, the realtors felt, added about $2,145 to the ultimate resale price of the property. This translates to an average ROI of 196 percent – much better than you’re likely to get on any publicly traded security you can invest the same money in.

A substantial majority of those surveyed, but by no means all – 76 percent – recommended home staging to home sellers as a matter of course.

The takeaway: A little bit can go a long way. It’s probably easy to spend too much on home staging. Concentrate on accenting a few key rooms – the kitchen, master bedroom, the living room and bathroom. But for three or four hundred dollars, a good stager can do a walk-through with you, and provide a detailed list of suggestions and recommendations.

Is it Worth It?

I would do it – particularly on your first few properties. You don’t necessarily need to go overboard. But if you can find a good staging consultant in your area, a few hours with her is time well spent. Even if you only break even on your investment in a home staging professional on your first property, you can amortize her knowledge and insights over many future properties. After your first few houses and walk-throughs with a good stager, you will start to get the hang of it. So even if your ROI on home staging expenses is flat on your first few homes, it can easily grow over time.

Jason Van Steenwyk is a veteran financial industry journalist who has been fighting to make the world safe for the retail investor since 1999. He lives at Ground Zero of the real estate bubble in Fort Lauderdale, Florida.