Why is 1% of the home's list price unrealistic for staging services?

By
Real Estate Agent with Watson Realty Corp

Ok, I just posted another blog about the HGTV show 'The Stagers' and my frustration over some negative comments.  This created a conversation in my family room (as I sit here with my laptop) and gives me pause for the thought on the question.... Why does it seem so unrealistic for us to charge 1% of list price for our staging services?

Agents and their companies associated in the sale of a property receive approximately 5% - 6% (both buyers agents and sellers agents combined).  If we help to contribute to the ultimate end sale why do we not earn 1%?  Why is our time, energy and ultimate tools not as valuable?  We typically actually spend more on each and make significantly less hourly rate.  Is it because we don't wait to 'get paid until the home sells'?  I think it far more likely it is because we don't perceive ourselves as worth the money.

I know in my market we cannot outright charge 1% up front.  We would lose far too many jobs to other staging companies who also charge less.  This leaves us stuck with lower rates.  We have plans that are a bit more creative in the works that allow us to charge what we think we are worth while putting our money where our mouth is. 

If we can show that our work is every bit as valuable, isn't it time we earned what our agent couterparts earn?

Perhaps it is time that we, as PROFESSIONALS, rethink the concept of getting paid what we are worth, not what we THINK the market will bare.  It will bare whatever we show it is worth, not the other way around!

Posted by

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 Author Bio: Melissa Marro, Home Staging Industry leader, Realtor, and entrepreneur offers a unique perspective on New Home Construction, Resale Residential Real Estate, and Home Staging

For more information on buying or selling in the St Augustine, St Johns, Jacksonville, or Ponte Vedra area, visit StageListSellNEFL.com or call Melissa Marro (marro.melissa at gmail.com), Watson Realty, for more information (904-466-2093).

 

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Rainer
6,491
Chris Williams
Creative Staging Solutions LLP - Ponca City, OK
Creative Staging, Solutions HSR Certified Stager -ASHSR

Two hours later, I get to the end of this AWESOME blog! What great information ! Thank you for posting this. I was just asking my partner about the 1% idea and wouldn't you know it it is on AR! I agree we nee to charge what we are worth. My fear is like any business you set on a price and someone will undercut you! Then we go back and forth lowering our price to compete. I will hold steady and hopefully show the value in my service. Yes you can get it cheeper but if you want it done right give me a call....

Jul 30, 2008 05:22 PM #26
Rainmaker
299,622
Karen Otto
Home Star Staging - Plano, TX
Plano Home Staging, Dallas Home Staging, www.homes

GREAT & timely topic Melissa!

The market you live should generally dictate a fair price.  I got a call from someone in Oregon recently, yes OR. She was price shopping 3 stagers out of her area. While I was able to tell her what is fair market in my area of North TX, and any stager worth their weight in salt and that values their service charges in the neighborhood (for vacants)of .5 to 1.5% of the list price of the house - occupieds are really dependent on needs and scope of the work the client wants - it's not necessarily the same in OR.  In her market that may be completely off base and once I referred her to another stager in her area, she found out it was less.

For example: lets compare a similar 3,000 sq. ft house in TX at $300,000 to a 3,000 sq.ft house in CA at $800,000.

While 1 to 1.5% of the list price in TX sounds reasonable the same 1 to 1.5% list price in CA sounds outrageous (to some). Price points are different around the country for the same size and comparable style houses because the markets are different! I sold my 1,600 sq. ft house in Miami (no pool or spa) for the same price I bought my 3,000 sq.ft house in TX with a pool & spa! This same house would be over $500 in FL. So really we need to know our market and price accordingly. 

I believe in the value of my service and what I bring to the table. I cannot nor will not compromise my core business values just to get work. I'd be exhausted and broke and be out of business. If others find it necessary to price themselves cheaply in order to get work, I say let them.  If they don't value their business, eventually it will come around.

Jul 30, 2008 08:14 PM #27
Rainmaker
268,838
Kathleen Lordbock
Keller Williams Realty Professionals - Baxter, MN
Keller Williams Realty Professionals

Had to come back and see what all the comments were - good stuff.

Jul 30, 2008 08:41 PM #28
Rainer
9,224
Erin McGinnis
Picture it SOLD! Home Staging - Novato, CA
Marin Home Stager Staging

Great food for thought Melissa, thanks.  Where I work in Marin County, California, 1% of the list price would be fairly high.  The median home price is close to $1 million. In some parts of the county, that'll get you a 3/2, 1700 square foot home.  $10,000 to stage a relatively small house seems extremely high to me. Maybe there are other stagers in my county charging that and I don't know it!  But I think generally speaking, it's about half that.. maybe .5%. 

Like any industry, I think regional pricing will develop.  Our challenge is still to convince home sellers that staging is 'needed' and not just 'nice to have.'  Even in this county, there are home sellers doing short sales.  There are plenty of others who are not upside down in their mortgages, but whose homes are worth substantially less than they were 2 years ago.  So convincing them that they should invest more money in their homes when they are taking such a hit.. is difficult. 

Jul 31, 2008 11:08 AM #29
Rainmaker
420,226
Melissa Marro
Watson Realty Corp - Saint Augustine, FL
St Augustine, St Johns, Ponte Vedra

Well I'm glad to see that there were no real negative comments here, most everyone seems to understand the need for us to increase our rates, though some areas are not quite ready for it yet.  I do wonder how many of us have markets that aren't ready, or we aren't ready to ask for it. 

I do think that if we are going to ask for this type of income though we need to follow Michelle's thought process of putting our money where our mouths are.

Aug 01, 2008 08:02 PM #30
Rainmaker
76,793
Home Staging
Showhomes - Nashville, TN

1% is where staging fees should start. At 1% on a $500k home, the staging company would realize $5000. If you have any type of scaleable business with real overhead and staff, your fully loaded costs of doing business will eat that up before you even get to the cost of furniture and accesories. Most small business owners make the mistake of not calculating fully loaded costs into their fees.

We charge 1% and find it is getting easier, even with competition. So many people get into the staging business and dorp out as soon as they realize they can't make enough money to stay in business.

I think we would all like to see higher prices and we'd all like to see poorly trained stagers cutting costs come to a stop. It really does do a lot of damage to the industry.

Great post, Melissa!

Aug 11, 2008 07:15 AM #31
Rainer
12,133
Karla Davis
Florida Home Staging & Redesign, Inc. - Orlando, FL
Orlando Home Staging Firm

I couldn't agree with you more Melissa! The very photos alone are what create interest for a property, of which stagers have helped create as we show the home in it's best light. I totally agree with your argument about what Realtors make vs. stagers in terms of percentage.

There is an awful lot of work and talent that go into each staging, I don't see any reason why we shouldn't be rewarded accordingly, ESPECIALLY in today's market.

Excellent point & post!

Aug 11, 2008 10:07 AM #32
Rainer
24,026
Anne Vigneri
CASA VERO Staging & Redesign - Albuquerque, CA
Serving the Mariposa California

OK... This 1% deal,,, or even .50% ..  What does this buy? ,,, Is every room being staged with furniture and art and accessories?...  Personally, I have never furnished every room, in a vacant home., I prefer to do a really bang up job on the public rooms, and the master, .. and of course appropriate accessorizing of all baths and the kitchen..  Some rooms are left empty.. ( I really hate to see a lonely rug, or one potted plant sitting in the corner of an otherwise empty room,,)

 

 

Aug 11, 2008 02:50 PM #33
Rainmaker
420,226
Melissa Marro
Watson Realty Corp - Saint Augustine, FL
St Augustine, St Johns, Ponte Vedra

Anne - for me, 1% would mean that we would stage and make any cosmetic changes that are necessary.  The budget may go slightly up or down depending on the detail of this.  I don't know how things are in your area, but too often sellers try to cut corners and eliminate recommended rooms or things like painting.  This would give us more power to do what really needs to be done and still keep it from breaking the bank while they are selling.

Aug 11, 2008 08:34 PM #34
Rainer
36,709
Kelly Townsend
Coldwell Banker - Santa Rosa, CA
CDPE, Realtor

Melissa -

Great post! As always your wheels never stop turning. This is something that my husband has been wanting me to do for a while now. Charge my regular staging fee if they pay upfront or offer to accept payment at close of escrow for a higher fee, something like the 1%. I've just not wanted to go there because there are too many factors that are out of my control, how the realtor markets the property, how it is priced, etc. I would be interested to see what you are planning.

Aug 11, 2008 10:37 PM #35
Rainmaker
665,068
Maureen Bray Portland OR Home Stager ~ Room Solutions Staging
Room Solutions Staging, Portland OR - Portland, OR
"Staging that Sells Portland Homes"

Melissa, This is a great topic.  In my market, if you take a home listed at $500K, 3/4 of 1% is not at all out of line IF it includes 3 to 4 months rental of the staging inventory along with the staging fee.  However I think that many sellers & agents get hung up on the fact that you're "selling" a 3 to 4-month rental period, and their anticipation is that staging will sell the property faster than that.  So, in a way the fact that staging has been promoted by some training companies as selling your home in "13 days" or some other ridiculously inaccurate time period has hurt us!  What to do?

Aug 12, 2008 12:28 AM #36
Rainmaker
420,226
Melissa Marro
Watson Realty Corp - Saint Augustine, FL
St Augustine, St Johns, Ponte Vedra

Kelly - Yes, my wheels are always turning! lol.... my husband says that all the time.  To know where I am going with this read... Continuing the Thread... Contingency, Deferred or Real Estate Developer?  Some of it might not quite make sense in the comments because one of the commenters removed all his posts.

Maureen - I agree that when I see stats like that I cringe.  For some markets it may work that quickly....not here in Charleston though.  If we can get it under 30 days then we were phenomenal!  We also don't have large furniture chains for rental & the shortest contract you can get here is 90 days.  So, sell it in 4 days or 60 it doesn't matter... you still have to pay that rental bill.  We own our furniture but we use the same basic contracts that the other companies use - playing with the competition. 

Aug 12, 2008 08:40 AM #37
Rainmaker
268,838
Kathleen Lordbock
Keller Williams Realty Professionals - Baxter, MN
Keller Williams Realty Professionals

Melissa - would you please clarify what this does cover - how much painting, what kind of cosmetic changes, do you buy curtains and rods and leave them with the property?

Thanks!

Aug 12, 2008 10:43 AM #38
Rainmaker
420,226
Melissa Marro
Watson Realty Corp - Saint Augustine, FL
St Augustine, St Johns, Ponte Vedra

Kathleen - every house is different so the answer would be different each time.  The concept is that this would give us a little more power to do what needs to be done without the budget objections.  It may not be right for every client - but I do think that getting closer to 1% should become the norm. 

What do agents to do earn 3% (average listing is 6% around here with 1/2 to the LA, 1/2 to the SA.. .then the broker takes their cut of those amounts)?  If we PARTNER with the agents to help them get the home sold, maybe we should get paid a little more like it.  If all we do is bring in furniture, art & accessories, then maybe not. 

Aug 12, 2008 11:05 AM #39
Rainer
1,367
Rania Peet
Pure Energy Real Estate - Frederick, MD

Real Estate agents should pay for staging. Its their investment into a property and how they go about it that gets the house sold, in turn giving them a large check at the end of the day. Staging should be part of their investment.

But thats what im used to, so its easy for me to say that.

Aug 12, 2008 12:57 PM #40
Rainmaker
420,226
Melissa Marro
Watson Realty Corp - Saint Augustine, FL
St Augustine, St Johns, Ponte Vedra

Rania - Interesting!  I usually advise against the agent paying for the staging as it is the homeowner with the most to gain.  Most of the agents I work with pay for the consultation, but not the actual staging.

Aug 12, 2008 02:56 PM #41
Rainer
1,367
Rania Peet
Pure Energy Real Estate - Frederick, MD

Well yes the homeowner has much to gain, but not so much these days. The market SUCKS as we all know and of course it wont stay that way, but with my experience, most homeowners feel incredibly strapped. They are already dealing with selling a depreciated house on top of 6% of the sale to buyer and seller agents, and dont forget to include the plethora of work they probably have to put into it just in the light fixture/paint/landscaping/carpet/kitchen/bath updating world. So to have to pay even more money for staging, is just a really really hard sale.

In my market, the agents pay for it as part of their investment.

Aug 12, 2008 03:19 PM #42
Rainmaker
268,838
Kathleen Lordbock
Keller Williams Realty Professionals - Baxter, MN
Keller Williams Realty Professionals

Thanks Melissa - I do think that if the sellers had a set price to pay for staging services ; instead of add in this and add in that to a sum of ? it would be easier to conceptualize.  We  have certainly tossed around the % pricing and will continue to explore it.

Aug 12, 2008 09:37 PM #43
Rainer
111,313
Toronto's 2 Hounds Design: Decorating + Staging
2 Hounds Design + Home Staging - Toronto, ON

Wow, lots of reading over the last couple of hours! OK, my quotes always land in the 1 to 1.5% of asking even when I've not been told the list price. I'm that good! GUFFAW!

Appologizes, I'm very tired.

I've got a 'stager' who is a member here on AR who is bending over backward to undercut me...on a job I've already staged and the owner told her thanks but no thanks after getting her quote and looking at her portfolio.

And yes, if she reads this comment I will hear about it from my client...through the Realtor who has got it in her head that the property should be staged specifically for a 75 year old with one foot in the grave. Ouch! Go on AllDecor...dare yah! :)

Anywho...apparently someone can stage a huge vacant condo for $3000 dollars...which was about .25% of asking.

I know what we, as stagers, are worth, I also know the cost of quality rental pieces, my time on a project from start to finish etc. And like Michelle's dad, I won't leave the house unless I'm getting paid a fair price to do my job.

So *someone* (see above) who is still trying to get a client who chose not to use them must see this client as one dumbass or a cash cow.

In my market 1% to 1.5% up to 2% on a vacant is absolutely fair...too bad there are 'stagers' here who are so afraid of not being successful they will do just about anything to try to damage their peers and get the jobs for themselves. Don't they realize there is enough work for all professionals...and if they are not getting the jobs...maybe they are not that good.

 

Aug 12, 2008 09:56 PM #44
Rainmaker
420,226
Melissa Marro
Watson Realty Corp - Saint Augustine, FL
St Augustine, St Johns, Ponte Vedra

Rania - the great things is that every market is different.  If it is working in your market, I'm certainly not going to downplay it!

Kathleen - Yes, and when we can do all the work necessary then it is a much more productive end product.  Don't you think?

Dane - Sorry you've been having your own competition issues there.  You already know mine here.  1% - 2% would not fly here, except on the lower end homes and even that would be stretching it.  We are working on bringing up the numbers but 2% is definately out of reach right now..... we are still shooting for the 1.

Aug 12, 2008 11:32 PM #45
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Rainmaker
420,226

Melissa Marro

St Augustine, St Johns, Ponte Vedra
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