Staging Your House: Worth It or a Waste of Money?
Today, we want to talk to you about staging your house when preparing it for sale. Specifically, we aim to determine whether staging your home truly yields worthwhile results.
TABLE OF CONTENTS
- Introduction
- Home Sales Data
- Result and Staging Cost
- Return on Investment of Staging
- Financing Options for Home Preparation
- Conclusion
When we work with clients who are contemplating selling their homes, we emphasize the importance of ROI-positive improvements that can boost the overall value of their home. In other words, for every dollar invested in preparation, it should ideally bring back three, five, or even ten dollars in the sale of their home.
Our experience as real estate agents gives us a trained eye to know just what these improvements are for each home we list. We recognize that our clients may only sell a home once every ten years or more. Therefore, it’s important to give them concrete data about what improvements yield a positive return, rather than rely on one-off anecdotes.
To achieve this, we conducted a comprehensive analysis of properties sold over the past 3.5 years. We examined a total of 5,593 home sales that took place in Alameda, Berkeley, and Oakland since the beginning of 2020. As a result, we now have valuable data to marry the anecdotes with the hard facts.
Home Sales Data for Alameda, Oakland, and Berkeley
What we’re going to do is look at the home sales from 2020 in Alameda, Oakland, and Berkeley. Then, for each city, we’re going to look at the difference in home sales between the three categories.
We’ll start by focusing on vacant homes, which in our area usually means that they are both vacant and staged. Not always, but the vast majority of the time, this means a staged home where the owner has moved out. Secondly, we’re going to look at owner-occupied properties, where the seller continues to reside. Lastly, we’re going to look at tenant-occupied properties, which refer to rental properties where tenants are currently living.
Disclaimer:
Just a quick disclaimer before we get into these numbers. The data we’re going to share with you is all based on averages that we found in the MLS. It doesn’t always apply to every property. Therefore, while the strategies we discuss may yield a positive return on investment (ROI) for many properties, it is important to consult with us or a reputable agent. This will ensure you receive a professional opinion tailored to your specific circumstances and objectives.
Let’s dive in.
Alameda Data Analysis
Let’s begin with Alameda.
According to the data, vacant and staged homes in Alameda had an average time on the market of 16 days over the last 3.5 years. In comparison, owner-occupied homes in Alameda remained on the market for an average of 20 days, while tenant-occupied properties remained on the market for an average of 21 days. This indicates that owner-occupied and tenant-occupied properties took 27% and 33% longer to sell, respectively, compared to vacant and staged homes.
Furthermore, vacant and staged homes in Alameda sold for an average of $817 per square foot. On the other hand, owner-occupied homes and tenant-occupied homes sold for an average of $798 and $616 per square foot, respectively. This means that owner-occupied and tenant-occupied homes sold for 2.25% and 24.5% less, respectively, when compared to vacant and staged homes.
Oakland Data Analysis
In Oakland, however, vacant and often staged properties took an average of 24 days to sell. On the other hand, owner-occupied homes had an average selling time of 26 days, while tenant-occupied homes took around 47 days to sell.
In terms of pricing, vacant and often staged properties in Oakland sold for an average of $653 per square foot. Similarly, owner-occupied properties also sold for the same average price of $653 per square foot. However, tenant-occupied homes in Oakland had a lower average selling price of $499 per square foot.
Now, here’s something interesting to note: The vacant and staged homes and owner-occupied homes sold for the same average price, but it’s important to consider that the dataset includes data from 2020, a year significantly affected by the COVID-19 pandemic and associated lockdowns. These circumstances impacted people’s mobility and housing market dynamics. As a result, the average prices were inflated in 2020, which influenced the overall data. When excluding the 2020 data, there is actually a decrease of approximately 8 to 10% in the overall average selling price of owner-occupied properties.
To summarize, on average over the past 3.5 years, vacant and staged homes sold the fastest among the three categories in Oakland. Owner-occupied homes took 8.25% longer to sell, while tenant-occupied properties had a 92% longer selling time.
Additionally, vacant and staged homes achieved the highest average price of $653 per square foot. When excluding 2020 data, owner-occupied homes sold for approximately 10% less on average compared to vacant and staged homes. Tenant-occupied homes also had a lower average selling price, selling for 125% less than vacant and staged properties.
Berkeley Data Analysis
Lastly, let’s dive into Berkeley, where things get really interesting once again.
According to the data, vacant and staged homes in Berkeley took an average of 20 days to sell. In comparison, owner-occupied homes had an average selling time of 21 days, while tenant-occupied properties took approximately 51 days to sell.
In terms of pricing, vacant and staged properties in Berkeley sold for an average of $938 per square foot. Owner-occupied homes, on the other hand, sold for an average of $913 per square foot. Tenant-occupied homes had a lower average selling price of $572 per square foot.
To put it simply, owner-occupied homes took 5% more days to sell compared to vacant and staged homes. Additionally, they sold for 2.5% less on average, just like in Alameda. Conversely, tenant-occupied homes had a significantly longer selling time, taking 150% longer to sell, and sold for 40% less than vacant and staged homes.
It’s important to note that various factors come into play here, such as rent control, tenant protections, and other relevant considerations. However, we won’t delve into these factors in this video as they are not the main topic. Nevertheless, it clearly demonstrates that who occupies the property actually matters, and we can observe this through the data.
Result and Staging Cost
Now, you might be wondering, “What’s the next step?” Well, the reason we compiled all this data is to determine if it’s truly worth it to move out and fully stage your home, considering the current staging costs. Let’s try to find out.
For the sake of this example, let’s assume the cost of staging your home is $5 per square foot. Of course, the actual cost can vary depending on factors such as the stager you choose and the duration of the staging period. Generally, staging contracts last for two to three months, meaning the furniture will be in the house for approximately 60 to 90 days.
Based on the data we shared earlier, it’s evident that vacant and staged homes performed exceptionally well. Not only do they sell faster than the other two categories, but they sell for more money as well.
So, the question then is: what is the actual return on investment if you opt for the vacant and staged approach when selling your home? Let’s look at the numbers.
Return on Investment of Staging
Alameda
Based on the data, vacant and staged homes in Alameda sold for an average of $19 more per square foot compared to owner-occupied homes. For instance, if you have a 1,500-square-foot home, that additional $19 per square foot amounts to a substantial $28,500. This is the kind of financial advantage you can expect when selling vacant and staged homes instead of owner-occupied properties, and you can expect even more when compared to tenant-occupied properties. Then, if you have a bigger home, like a 2,000-square-foot home, for example, that number further increases to about $38,000 more.
Considering the cost of staging at $5 per square foot, staging a 1,500-square-foot home would amount to $7,500, and for a 2,000-square-foot home, it would be $10,000. This implies that the return on investment for staging costs is nearly 4 times the amount you put into preparing your home. This represents a significant gain!
Therefore, in Alameda, the overall net gain strongly supports the idea of opting for the staging route when selling your home.
Oakland
In Oakland, the contrast in numbers is even more striking. Once again, excluding the 2020 data influenced by COVID, we observe a substantial difference of 8%, 9%, and 10% in terms of dollars per square foot between vacant-and-staged homes and owner-occupied homes. Considering this, staging your home can lead to a significant variation in the sale price, ranging from $62,000 to $100,000 for a 1,500 to 2,000 square foot home in Oakland. That’s the magnitude of difference you can anticipate in the sales price by choosing the vacant and staged option over owner-occupied homes. Naturally, the disparity in sales price will be even more pronounced when compared to tenant-occupied properties.
Berkeley
Lastly, in Berkeley, vacant and staged homes, on average, commanded a premium of $25 per square foot compared to owner-occupied properties. For instance, for a 1,500-square-foot home in Berkeley, that translates to an additional $37,500 in the sales price. Likewise, for a larger 2,000-square-foot home, it amounts to an extra $50,000. In simpler terms, it signifies a gross return that is approximately 5 times the initial investment made for staging at $5 per square foot.
Thus, once again, what we emphasize with our clients day in and day out is the concept of ROI-positive investment. The numbers we’ve presented are based on the average data from nearly 5,600 home sales over the past three and a half years. As the data indicates, vacant and staged properties tend to sell for a higher price in a shorter period. Admittedly, this does necessitate an upfront investment to achieve those results. Nonetheless, it is an investment that pays off handsomely when the time comes to sell.
Also, another thing that we always share with our clients is that we want the money that they put into their home in preparation for sale to be the best money they spend all year. So, with something like a 3:1, 4:1, or 5:1 return in a matter of months, it’s clear that it’s entirely achievable with this kind of information.
Financing Options for Home Preparation
Now, you might be thinking, “This is all great, but where do I get the money to stage my home? I might just not have $10,000 sitting around in an account.”
Well, when you’re considering selling your home, there are several things to think about. There’s the cost of staging, painting, or installing new light fixtures or recessed lights. Or, perhaps you’re going to think about other ROI-positive investments in your home prior to sale. All of these may start to add up. And you might wonder, “Okay, that’s great, but I don’t necessarily have all that money sitting in an account. It’s sitting in the equity in my home or it’s in other investments.”
One of the things that our team offers to our clients upfront is 0% interest, no markup, and the fronting of monies for all of these agreed-upon improvements. And this is so that the painters and the stagers can all get paid on time. This is to ensure that all of these things that need to be done can happen. After all, there’s a timeline here, and they don’t want to wait until the close of escrow to get paid. So, our team will front the money to our seller clients and then simply get paid out of escrow.
It’s worth noting that there are other brokerages that offer similar programs. However, what sets ours apart is the absence of markups, bureaucratic procedures, limitations, or requirements to use specific vendors. Our approach is highly adaptable and flexible, tailored to meet the unique needs of each client. It’s a service we provide without any constraints because we recognize its significant ROI-positive impact, and now you can see why we do it.
Conclusion
In conclusion, vacant and staged is the best option to go with when selling your home in Alameda, Oakland, and Berkeley. And based on the numbers we’ve presented, staging is not only worth it; it is incredibly worth it. It has the potential to yield returns that range from 2 times to 5 times, or even more, the initial investment made in the staging process.
Of course, it’s important to acknowledge that these figures are based on average data, and individual outcomes may vary. Although there might be rare instances where staging is not as beneficial, in most cases, the current market trends strongly demonstrate its effectiveness.
WE hope our video on what is a Real Estate Planner and why you need one has helped you.
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