Is the staging payoff in the price or in the carry? They lead to different decisions

Question

I've been building a comp file while I look for my first couple of deals, and I can't get the two claims about staging to sit in the same model.

Claim one is price. Staged houses close higher, so you spend 3,000 and you get some multiple of it back at the closing table. If that's the mechanism, then staging is worth more on expensive houses, worth more where buyers are discretionary, and basically not worth it on a cheap house where the whole premium would be swamped by noise.

Claim two is speed. Staged houses sell faster, so the payoff is carry you didn't pay. If that's the mechanism, then staging is worth more when your monthly carry is heavy or your loan is short, worth more when the market is slow and days on market are stretching, and it can pay perfectly well on a cheap house if the carry per month is high relative to price.

Those two stories point at different houses. A stager pitching me leads with price every time, because that's the number a seller wants to hear. Everyone I've talked to who has actually paid for staging on a flip talks about the calendar.

Complicating it, the two are tangled in the comps. The houses that get staged around here are also the ones with the better rehab, so I can't separate the effect of the furniture from the effect of the finish work.

When you underwrite the staging spend, which side are you actually crediting?

samantha_ruiz · Answer

Carry, and it isn't close for me.

My last four flips had all in monthly carry between 2,700 and 3,900 depending on the loan. Staging ran about 3,000 a house. So the whole spend is roughly one month. I can't measure whether staging got me 6,000 more in price, the spread on my comps is wider than that and always will be. I can measure that the two staged ones went under contract in under three weeks and the one I listed empty because I was out of cash sat six weeks before I cut the price. That price cut cost me a lot more than the staging would have.

Where your framing matters, @bramble, is what you do when a stager wants an eight week minimum. If the payoff is carry, a long minimum term is fine because you're buying against your own holding cost either way. If the payoff is price, you want the furniture in for the first two weeks of showings and gone, because after that it's paying for nothing.

nataliehsu · Answer

The confounder you named is the real obstacle to ever settling this. Staged listings are also the ones with a photographer, a decent agent and a finished kitchen. Any comp study built on public data is measuring all of that at once and calling it staging.

The closest thing to a clean read I've seen is the same builder staging some units in a spec run and leaving others empty, which is at least the same product and the same finish level. Even then the staged ones tend to be the model unit in the best position.

derekj19 · Answer

Stagers sell price because that's what makes a seller sign, and the flippers and developers who keep them busy are buying calendar. Both parties are fine with the mismatch because the invoice is the same either way.

If I were putting a staging business together I'd price and pitch to whichever one the client's own money cares about. A homeowner with no loan pressure genuinely wants the price story. Someone paying interest monthly wants to hear how fast the truck can be there after punch list.

Is the staging payoff in the price or in the carry? They lead to different decisions

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