Is it reasonable to require listing agent to arrange and pay for staging when listing a new $2.75 million home?

Asked by lymanorton1, Santa Barbara, CA Fri Jan 24, 2014

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Robert Heckes’ answer
Robert Heckes, Agent, Santa Barbara, CA
Wed Feb 19, 2014
Hello Lymanorton1,
Recently, I represented a seller on the Riviera. The seller was in a high equity position but with no liquidity to cover the necessary market preparation steps for the property. Part of the reason I felt comfortable paying for market preparation expenses is that we had a written agreement that I would be refunded on close of escrow. The other factor that gave me the green light to take this risk, is that the property was priced right in a low inventory market. We had 6 offers in the first week and it sold for all cash over asking price. I received my upfront funds back along with my commission and the seller received more money than expected for the property.

At your service,

Robert Heckes
Sotheby's International Realty
1436 State Street
Santa Barbara, CA 93101
0 votes
Bill Eckler, Agent, Venice, FL
Sat Jan 25, 2014
Let's if one would believe an agent should consider this as an opportunity that shouldn't be passed up, they should realize that the agent responsible could end up spending thousands on marketing a home that doesn't sell and eat the loss.

The only way I would enter into a venture such as this is to do so with a written agreement that would require the seller to repay me the entire amount invested should the property not sell or be withdrawn form the market for any reason.

One should not consider this a part of the normal marketing expense at any price range.

Just keeping it real!

3 votes
Annette Law…, Agent, Palm Harbor, FL
Sat Jan 25, 2014
Good, good, good responses from everyone. I specifically like Mack, Bill and Debra's responses.
--------I would add a somewhat different perspective. I would agree to pay ALL costs, including staging, inspection, even repairs... IF...... you would contractually commit to a price at which you would SELL your property.---------That little piece of information allows the agent to measure the likelihood of success.------However, if you piled on and come up with some cosmic number as what you 'believe' the value should be.....I can't invest my dollars in a ill fated exercise.-------As you well know you should not invest emotion, expectation or money if you can not control the outcome. Under normal circumstances, the homeowner has veto power, even on a full price offer. I just has an owner turn down an offer that WAS at the previously agreed to sell price! Fortunately, I have not invested in staging. Unfortunately, as we have all become to often aware, the 1st offer is often the BEST offer.
2 votes
Anna M Brocco, Agent, Williston Park, NY
Sat Jan 25, 2014
Since it appears that you are penny pinching, how about a role reversal for a second--would you pay for a stager upfront, without having a guarantee that the property would not be withdrawn from the market, expire from the market, or perhaps not sell for whatever reason during the duration of the agreement--you decide...
2 votes
Debra (Debbi…, Agent, Livingston, NJ
Sat Jan 25, 2014
My opinion doesn't really matter since I am not in your area, but since you're asking for opinions, here is mine (and, for the record, I deal in a luxury market, and have marketed new construction as well).

First of all - everything is negotiable, so you can always ask....but..........personally, I wouldn't agree to pay for that upfront.
I would pay for professional brochures and other marketing materials like that - virtual tour, postcards, etc............but in regard to
I might consider splitting the cost with the builder at closing....... it also would depend on the commission you are paying (here new construction usually has a lower commission attached to it as compared to a resale)..........and the extent of the staging you want (only the main rooms, or every room.....full staging w/ furniture and artwork, etc, or subtle hints of staging?).

And, is this a one house deal, or are there multiple homes you're building?

Good luck!
1 vote
Trevolyn Hai…, Agent, Highland, CA
Sat Jan 25, 2014
Everything is negotiable but typically cleaning, repairs, upgrades/improvements, & outside professional staging to the property to make it more sellable are the responsibility of the owner, especially since the staging costs for a home at your price point could possibly be significant. Because it is possible that after staging is completed and paid for you may decide not to sell, so if an agent were to agree to pay for it they would most likely do as Andrew & Thomas suggested and not pay for it up front but say they would reimburse you a specific amount at closing. Good luck.
1 vote
Summer Knight, Agent, Santa Barbara, CA
Fri Jan 24, 2014
I understand your concern but its similar to painting or doing other work to prepare your home for sale that a homeowner would generally pay for. A client of mine recently did the opposite, hiring a company to de-clutter and start the packing process for them in preparation to showings. I believe it cost them about $6,000 but the house looked so good after they were done we increased the list price by $20,000 and ended up selling for $20,000 over list!

But as with many things in life, there is room for negotiations generally...and in the end we want happy clients!

While any number of agents (me included) would love to discuss helping you sell your home, it sounds like you have a relationship established with someone already and I am sure he or she would love to discuss this with you and come to an agreeable arrangement.

Summer Knight
Sun Coast Real Estate
1 vote
Thomas Schul…, Agent, Santa Barbara, CA
Fri Jan 24, 2014
Greetings! I find that it is very dependent on the situation. Generally the seller would pay for staging. One alternative that I have utilized in the past is for a seller to pay for the staging up front and the agent would reimburse an agreed amount upon the successful close of escrow. There are many ways to customize listing service to satisfy the all parties. Feel free to contact me if you would like to discuss more! Thomas Schultheis
Broker Associate - Berkshire Hathaway
1 vote
Tracy Nelson, Agent, Brentwood, CA
Fri Jan 24, 2014
Depends on a few factors, but it is always reasonable to ask, and come up with a plan that makes you, the client, happy. If you'd like to discuss this further, feel free to call or email me.
1 vote
Andrew Rose, Home Buyer, Santa Barbara, CA
Fri Jan 24, 2014
Maybe you could suggest to the agent that you will pay for it now, but wish to have them reduce their commission at close of escrow to cover your costs. That way they don't have to pay money out of pocket or assume the risk of covering the cost if it doesn't sell while they hold the listing.
1 vote
Mack McCoy, Agent, Seattle, WA
Fri Jan 24, 2014
Who is the sale of the property more important to: the agent, or the owner?

That's the person who should pay for the staging of the property.

All the best,
1 vote
Walter 'Skip'…, Agent, Brea, CA
Fri Jan 24, 2014
I certainly do not think it is unreasonable.
Good luck,
1 vote
Alexander Gr…, Agent, San Jose, CA
Sat Jan 25, 2014
Really just depends on the agent. Sounds like you have chosen one that will not pay for the staging when you want one that will. If you need a recommendation for one that will I would be more than happy to help you.

Alex Greer
Loan Officer
NMLS #1056079
0 votes
JoAnn Pomatt…, Agent, Santa Barbara, CA
Sat Jan 25, 2014
Listing Agents will usually offer to pay an initial consultation fee for a Staging Company to advise a seller on how to use their existing furniture and make changes (clean clutter, remove items, etc) if home is occupied. If home is vacant, the same is offered with the Staging Company offering a quote for staging services using their furniture on a rental basis. Usually a three month minimum. Sellers normally pay for Home Staging services after initial consultation.

Because Home Staging is a powerful selling tool, I encourage sellers to view Home Staging as an investment on their ultimate profit, rather than viewing it as an expense.

Think about this: if you are carrying the costs associated with owning a home while on the market, such as mortgage, property taxes, home owner's insurance, fuel, electricity, interior and exterior maintenance, that adds up.

I know of homes that are still sitting on the market today that have had numerous price adjustments. Many of these homes would have benefited with Home Staging from the beginning of the listing. Price adjustments and time on market cost the homeowner.

Agents and sellers prefer a quick sale vs. a "stale" listing that requires price adjustments.The cost of Home Staging is significantly less than the first price reduction. First price adjustments are normally $5,000 or more depending on the original list price.

Also consider this: many times, after a home has been Staged (or if it's Staged before listing) it can command a higher price because Home Staging adds value to the home. It appears to buyers as "move-in ready" and looks good in media print and on the MLS. It other words, it shows well in comparison to the competition.

It's an upfront investment but pays off at the end of a quick closing escrow!

JoAnn Pomatto-Gomez
Pacific Coast Realty
805 705 3798
License# 01134808
0 votes
I do a fair amount of staging for home owners and have worked with realtors. I think that the investment in selling the property is a shared one between the realtor helping to find a price that will attract buyers and work to market the property BUT they need a show quality home to deliver the best price result.. I believe that is the responsibility of the seller to deliver the home in that condition, though it is fine for the realtor to help the seller know that they need to have the house staged. What that can range from could be having the home cleaned up and decluttered, changing out and upgrading furnishings to sometimes painting, upgrading flooring, repairs etc. as well as making it attractive with furniture placement/decor.
Flag Wed Feb 19, 2014
Langhorne Gr…, Agent, Montecito, CA
Sat Jan 25, 2014
Great question! I think the answer varies according to the market place. As others have said everything is negotiable. That being said, Santa Barbara is a unique area as you know and ultimately is depends on the property. I would need to see it to make a recommendation. I would be happy to take a look and talk with you about the marketing and sale of your property if you have not signed an agreement with another realtor to date. In Real Estate who you work with matters! So feel free to call me.
Sofie Langhorne, Coldwell Banker Residential Brokerage, Montecito- Santa Barbara. CALBRE#01851983
0 votes
Don Zurlinden, , Santa Barbara, CA
Sat Jan 25, 2014
Give me a call. I have some great staging options that will not cost you the seller anything. 805-451-6493
0 votes
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