March 23, 2010

Is Home Staging an Investment . . . or Just an Expense?

This is a question on many home sellers minds! Here in Calgary, I think the home selling market is just awakening to the concept of Home Staging.

Perhaps HGTV has does its part in spreading the word about Home Staging, but I think many home owners are still skeptical when it comes to laying down some of their hard earned cash. Especially when it’s a home they want to sell — not invest in further.

I don’t blame these home owners and sellers – I don’t like parting with money that needn’t be spent, either!

The reality, though, is that home buying has changed. Buyer’s expectations have been elevated by all those TV shows, and home decor magazines and show homes . . . and even your home selling competition.

Everybody has to work a little harder to sell a house than before, and when the house down the street does a mini facelift, you need to compete with that, too. A buyer is looking at both properties — not just yours.

The general rule of thumb is that a seller should invest up to 1% of their home’s value getting it ready for sale. This includes any deferred home maintenance, some painting, pre-packing and decluttering . . . and then styling or staging to create an inviting presentation.

So, for an average home of $400,000, that’s $4,000 to get it ready to sell.  That sounds like a lot!

But consider the alternative . . . you choose not to spend anything in preparing your home.

Scenario A

A buyer comes along, they are somewhat interested. The house meets most of their needs, but they hum and haw a little. They just don’t love it. They finally decide to put in an offer, but they start at $353,000. They’re not in love, so they don’t want to pay top dollar.

Offers and counter-offers go back and forth. It’s at $369,000 and they say that’s it. They aren’t going to pay another dime. Since they don’t love it, they are willing to risk losing the deal.

Scenario B

Your home goes on the market. You have a fair number of showings, but after the first couple of weeks, the numbers start to dwindle. Weeks turn into months, and now you’re just sick and tired of the whole process. Your Agent recommends reducing the price to attract more attention.

The typical first price reduction is close to 10%. So now you’re asking price is $364,000. Traffic to your property does increase, but after being on the market for a few months, buyers still think there’s a deal to be had. An offer comes in for $349,000.

That $4,000 doesn’t sound like so much anymore!

The Calgary Real Estate Board says that, “Studies show the longer a property stays on the market, the less the seller will net.”

Your best bet to hooking a buyer, especially in a slightly tougher market, is to engage them with the property. Make them fall in love! This is what Home Staging and Property Styling can do for you.

And for a typical $400,000 vacant home, the cost is a lot closer to 0.5%. For an occupied home that just needs that Wow Factor, it’s likely even less.

The 2009 Home Gain survey shows that Home Staging has a 586% return on investment when selling your home!

What I’ve learned myself as a home seller, is that the difference between that $400,000 home selling for $375,000 and $390,000 is how much the buyer wants it . . . and how urgently they feel they need to act.

The astute home seller takes advantage of this buying psychology. Making a short-term investment before going on the market is the surest way to be off of it more quickly.

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