Staging - how much do you feel is appropriate to pay?

[Sean Kollee]

Currently I am wrapping up a fairly upscale newly built three unit townhouse project (sub $600k per unit).  Given the soft market conditions, and negative outlook, sales are not what they once were just one year ago in terms of price or days on market.  It makes sense to show the show suite in the best possible light to impress the buyers, thus staging is essential, now more than ever.  

However, in the local market, the stagers have had a pretty good run of business and their fees are high, bordering astronomical.  My most legit recommended stager quoted $2000 for month one, and $1500 for each additional month.  This is just for the kitchen, living room and master bath in a two bedroom unit.  Given the slower sales I must be prepared for a lengthy staging timeline, my agent and I discussed this and he figured up to six months, or at least until the busier spring market in April.  This could cost up to $10k.  Side note, agents love staging, it is very expensive marketing that they don't pay for, so of course an agent is going to push for full on staging using the best company available.  Its not like my agent was willing to pay the staging bill in exchange for a listing agreement on the project.

So, decision time came to host the first open house a week ago.  We decided professional staging would be too expensive and eat into the diminished margins.  We scrambled around town looking for deals and using a few personal items, like a bedroom set with an old mattress the we repurposed for the staging with new linens, some new items like a sectional and table, and rugs and accessories we borrowed and bought.  The end product, while not as good as professional staging, is far better than not staging at all. Total cost was about $2k, and could be far less if we sell the items we purchased.  Likely we can recoup $500.  So the question is, could better staging earn back the $10k in cost in terms of faster sale or higher price?  Can staging actually make that much of a difference to entice an offer?  Or is average quality staging going to deliver just as much as a top quality staging job?  Thoughts???  At this time, we were able to attract an offer on one of the units, not nearly as high as I would have liked, but still acceptable.

[Michel Lee]

Hey, Sean the simple answer to your question is yes, staging will recoup you 10k. Why?

Studies show that most sellers that do stage their homes expect a increase return of 1-4%." (Realtor® 2015 Staging Report & News Release). 

That being said you would need a return of 2% or higher on the 600k asking price to see significant returns. In your question, it sounds like you were not offered 600k. So what we can do is use the offer price.

y = price you were offered 

m = months

profit = (.02 times y) - {500 + (m times 1500)

You can also try this formula with a return of 1% and see how this will affect your profits. Hopes this helps! Good luck.