Home Staging – developing a home-staging business

Home-staging - For those who have a real estate background, a history in home decorating, or just a flair for making the most out of any space, developing a home-staging (otherwise known as real estate enhancement) business may be just what you are looking for.

Home staging is the art of making a piece of real estate very attractive to potential buyers. The reason people would hire a home stager is to make their real estate sell faster, for more money, or both. This is done by enhancing the positive aspects of a property while downplaying the negatives ones.

A home stager will go through the property room by room and decide based on budget and the neighborhood, what things should be done to the home to increase the value and desirability of the home. Easy choices include new paint colors and organizing/enhancing storage space. Harder choices may include updating lighting, appliances, new carpet, patio/landscaping, or changing out furniture.

Depending upon market conditions and where the home stager is starting from, this might mean a day or two of work or it could mean weeks. Prices you charge for home staging will vary significantly. What you will need to do is come up with a formula for determining this so that one person will understand why their cost may be different from those of a friend. People do talk.

Home staging in a boom economy

The benefits of home staging business vary with what’s going on. In a boom economy, home staging helps the customer sell at the top or even ahead of their market. A properly staged home can sell for 10-15% more than it otherwise would. Even homes in the $200,000 range can benefit from this service. An owner with a $200,000 home who invests $5,000 in hard costs and $2,500 in home stager costs, but sells the house for $220,000 will have netted $13,000 in the process.

These differences compound as the market value increases. And the level of your home staging services, and therefore price, can vary as the services increase. At the low end, you may provide simple consulting services with a limited number of hours dedicated to home staging. Higher markets will require more hours, but they may also require more services including you doing the actual buying and working with designers on behalf of the client.

Home staging in a bust economy

In a bust economy, it helps the customer be noticed and compete in a market that is super-competitive for a small pool of potential buyers. Down economies typically mean that there are more houses available for purchase and fewer clients that want or have the ability to purchase them. This means lower prices and much longer time on the market on average.

Most sellers don’t have the luxury of waiting out a market. The difference between selling and not selling a home can mean thousands of dollars per month in just the cost of holding onto a vacant home. If an owner is making payments with $3,000 a month in interest and has property taxes of $6,000 per year, add the cost of maintenance, minimal utilities, and potentially costs of not using their equity elsewhere, cutting the time on market alone (not including making the house sell for more) can easily save that seller $15,000 if the house sells in 90 days instead of 180 days. If the house also sells for 10% more, the gross value of the home-stager services could easily be over $50,000. Home staging makes a lot of sense for many home sellers. What you have to do is convince them of that and that you can do that.

How much money can I make?

Home stagers can make a lot of money. Many also don’t make very much. Increases in income are dramatic over time as you build client referrals, reputation, and have clients come back a second and third time around. Mostly, how much money you make depends on what you decide to put into it and the kinds of smart decisions you make. It also depends on the markets you serve.

If you serve lower end markets and only make $2,000 a job, time dictates that you probably won’t make more than $50,000 per year at most. If you serve higher end markets and develop your network and reputation, you could be closer to the 300,000-500,000 per year income range.

Geographical limitations/differences

The home staging business is all about location. Small towns with limited real estate markets are harder to crack than larger cities. But then again, once you crack those limited markets and develop your reputation, you can pretty much own that market.

Locations where the house values are twice what they are in other areas are also far more lucrative because much more is at stake. 10% extra on a 750,000 house in Connecticut has far more net value than the same house that only sells for $250,000 in Jonesboro AK.

Nevertheless, home-staging companies can make it great in most communities.

Competitors

Besides other home staging businesses, your competition is relatively limited. Interestingly, your primary competition is the customer him/herself. Most people have read a few things and tend to think their decorating skills just can’t be beat. The trick is to convince them that you have a larger picture of the market and an experience in tricks of the trade that sellers just don’t know. Many home stagers have a few freebie gems of knowledge they throw out to wow the potential client into understanding their expertise and build rapport and credibility.

The second secret area of competition is real estate agents. Larger more successful agents already know that while they can give the customer a few tricks, professional home staging is in their best interests. They don’t have the time or resources to do what you can do. They also know that if you do your job right, their percent of a larger and faster sale means more money in their pocket. Most experienced real estate agents want you to work for their clients.

The ones that are your competitors are the less successful and newer agents in the real estate business. Many think that home staging expertise comes with their newly acquired license and that they can look like more of an expert to their client than if they pass the client off to you.

Advertising your home staging business

Real estate contacts are the best advertising you can have. They are also the hardest to acquire. A real estate agent must really have confidence in your ability if they are to recommend their new client to your service. Not only do they want your service to work for the client, they must believe that your home staging service will add more money and faster to the sale, and therefore their commission.

Nevertheless, when you do build credibility with these agents, they are like gold to you. Cultivate these relationships and they will add credibility, accounts, and much knowledge to your home staging business.

License Requirements

Home staging companies do not require any licensing other than that which is required generally in your state and local community to run any business. The only exceptions to this would be if you venture out of the home staging end of the business to work as a real estate agent or as a general contractor. Each state has licensing requirements in these areas. One has to be careful in venturing out into these areas however, since each may appear to have conflict in certain areas of interest.

If you are opening up a home staging company, there are several things that you can do that would benefit you and increase your actual and perceived expertise. There are several home staging courses that you can take, many of which are available through local community colleges, while others are online. You would also find benefits to taking some real estate courses so that you understand the real estate business a bit better.

Home staging product supply

Since you aren’t selling a product, you won’t need product supply or vendors. What you will need is a contact base of reliable contractors and people you know can get the job done. You will need to network extensively and check out the reputations of companies. Be sure to qualify them in all aspects including that they are insured and bonded where necessary. This will be valuable information to your clients.

Financial Requirements

The starting of a home staging business doesn’t involve the purchase of inventory or supplies, your overall costs would seem to be relatively low. This may or may not be an accurate picture depending upon how you are already set up.

This is one profession you MUST dress and otherwise be the picture of confidence and success. You might be the most brilliant home stager, but if you come across as a dowdy house frau and drive an 8 yr old Corolla, few will take you seriously.

What to do next

The first thing to do is start to educate yourself about your competition and industry as it relates to your geographical location and your intended market.

Keywords: home staging, stager, real estate, home sales, home selling, decorating, redecorating