Wednesday, January 18, 2017

Failing to Make Repairs and Stage Can Cost You

Staging done badly undermines the appeal of your house
Decorated, Not Staged 
A lot of of the houses I see on line these days either have no staging at all, or there's been an amateur effort by the real estate agent or seller who don't understand the difference between decorating and staging. The ineffective and sometimes harmful pictures that result put the house at a significant competitive disadvantage. Of course attempted staging usually is better than none at all, because failing to make repairs and paying no attention to cosmetic appeal can really cost you.

The Crucial First Few Seconds

Most people know that today's buyers begin their search for a home on line, and you have seconds at most to get their attention in a positive way and make them want to visit in person. It stands to reason that if the pictures of your house aren't attractive, buyers will quickly move on to the next listing and you've lost an opportunity. If prospects do come and your house doesn't impress them by being clean, inviting and well maintained, you've either lost the sale or inspired a lower offer than you might have gotten if you'd made certain it was in sound condition and professionally staged before listing.

Case Study - Failing to Repair and Stage

To emphasize this crucial point, here's an example of how failing to make repairs and stage (or doing it badly) can squander the equity you've worked years to build. 

Let's say that houses in your development have been selling for $250,000 - $285,000. 
  • Repairs and professional staging costs are estimated at $2,500, of which a generous $500 is allotted for staging. You decide not to spend the money. 
  • A comparable staged house down the street in showing condition is listed at $275,000.
  • You decide to list your house for $265,000, thinking that a lower price will attract buyers and more than compensate for not doing the work. You forfeit a significant amount of money at the outset, and that's just the beginning. Because your house doesn’t photograph well, there are only a few showings and no offers. Keep in mind that had your house been repaired and staged, it could have been listed at a higher price, helping to offset the cost of the work and it would have been much more appealing.
  • The staged house down the street sells quickly for $270,000. You get anxious and reduce the price $5,000 to $260,000. 
  • More time goes by without results. You reduce the price to $257,500. 
  • After a long wait, an offer finally comes in at $255,000, pending the buyer’s inspection. You're down $10,000 from the original (low) list price.
  • During the inspection damage is found. The buyer demands a price reduction of $5,000 to cover repairs. Your original estimate for the same work was $2,000. 
  • After going back and forth, you agree to sell for $252,000. 

Here's What You've Forfeited:

  • the difference between the potential and actual initial listing price
  • plus the difference between the listing price and the selling price
  • AND you've paid higher costs for repairs, the costs of continued upkeep and the costs of lost opportunities, like being unable to buy that perfect new house you wanted. 

    Let’s Add This Up: 

    YOUR HOUSE                                THE HOUSE DOWN THE STREET
     AS IS                                                AFTER REPAIRS AND STAGING
    $265,000 list price  $275,000 list price ($10,000 more)
    $252,000 sell price                           $269,900 sell price ($17,900 more)
                                                                       - $2,500 staging and repair costs                   
                                                                    $267,400  (+$15,400 more net)
    With repairs and professional staging, the seller in this example had $15,400 more profit and a faster sale. This is a conservative example since the average difference in selling price nationwide between staged and unstaged houses is usually about 17%. And remember, this happened because you didn't want to spend $2,500.

    Home Selling is a Competition 

    The main point to understand about selling your house is that regardless of market conditions, you're competing against every other house in your price range. Your competition includes properties in your development and properties outside your immediate area, many with highly motivated sellers who are determined to make their house stand out. That's a big pool for discerning buyers to choose from. 

    Don't put your house at a disadvantage. Be a smart seller and do the work so that your house is ready to be a strong competitor from the moment you list. 

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