Study Evaluates Impact of Home Staging on Price
On December 26, 2013, a 2012 academic study which included evaluation of the impact of home staging on price was reviewed by the Wall Street Journal with the headline “Home Staging Effect? Not Much. A recent study finds that home-staging services affect a home’s sale price less than most people think.” This headline will certainly raise a few eyebrows among home stagers and real estate agents who still firmly believe home staging makes homes sell for higher prices. The research report, co-authored by Michael J. Seiler, professor of real estate and finance at the College of William and Mary, Mark Lane of Old Dominion University and Vicky Seiler of Johns Hopkins University, is entitled “The Impact of Staging Conditions on Residential Real Estate Demand.” Release is promised in 2014.
Originally Published on December 29, 2013. Updated February 21, 2014:
Certainly the headline struck fear into my heart as I read it over my morning coffee! I welcome studies as a way to prove or disprove the value of soft services and traditional wisdom, but, I have learned they can be misinterpreted. Remember Mark Twain’s comment:
There are lies, damned lies and statistics.
For this reason, I look forward to reading the full report when it is released. Meanwhile, here is a little background on home staging, so you won’t automatically conclude that for four decades supporters of home staging have been kidding themselves about its impact.
The Wall Street Journal article says:
“Using professional-grade rendering software created by an architecture firm in Virginia Beach, Va., each house featured either a “neutral” beige wall color or an “unattractive” purple paint color, and “good” furniture, “ugly” furniture or no furniture. The neutral and attractive options were chosen to appeal to the greatest number of people, Mr. Seiler says. The home buyers then reported what they would be willing to pay, as well as their overall impression of the house.”1
Four Reasons I Believe This Study Did Not Accurately Assess Impact of Home Staging
I draw your attention to four pieces of information missed in construction of the study as it is described in the Wall Street Journal Article.
1. The study was conducted by using ‘virtually staged, homes and therefore did not fully assess the impact of ‘real’ staging. Renderings, i.e. drawings, were the only source of information for the participants.
Pictures, even renderings, are undeniably important in advertising the property. They create first impressions and these impressions will linger in the subconscious mind of the viewer throughout subsequent tours. However, in most cases, pictures are only part of the information which leads a buyer to decide to buy. Usually, there is an actual visit! When buyers come to the property, they use the other four senses: smell, touch, taste and hearing.
‘Real’ staging addresses the impact to be made by all five senses. For the study to address the impact of ‘real’ staging, the professors would have needed to use actual homes and taken the participants on in-person tours.
2. The study ignored the fact that home staging is a multi-step process. Home staging includes completing repairs and economically feasible updates. These not only increase appeal of the property, but also, add actual value and result in real return on investment. The study probably did not include upgrades such as hardware and fixtures which are very common in the typical staging process. Presumably the study assessed only the impact on price of the final showcasing phase, not the whole staging process.
3. The study may not have been assessing the impact of staging as a professional stager would do it. The renderings used by the study were produced by an architecture firm. While I cannot confirm whether or not the rendering was done by home stagers or by architects, I want to point out that architects may not be staging in the way home stagers would.
The conventional approach for an architect or interior designer is “form follows function.” Stagers, being more concerned with marketing than design, may sacrifice some functionality to achieve the right look and feel to sell. For example, stagers often unabashedly banish a functional television so it will not compete with a selling point such as a fireplace. This is why it is not easy to live in a staged home.
4. The method of conducting the study may have minimized the emotional impact of staging for the participants and skewed their responses on price. Although participants were asked to report what they would be willing to pay, we don’t know from the Wall Street Journal article whether they actually believed they were making real bids on the homes shown to them.
When buyers decide to make large purchases where they are heavily vested in the outcome of their decisions, emotions have a great impact. Perhaps the method of conducting the study elicited a more logical response than putting real buyers in a real staged home might. When a buyer falls in love with a home, it will be easy to justify that it’s worth a few thousand more.
The study methods seem to have missed these points. Home staging is marketing rather than design. Home staging creates emotional connection for buyers through use of all five senses. And home staging is always undertaken with return on investment in mind. The study did not dispute the impact of staging on speed of sale. And, conventional wisdom says the faster the sale, the more likely to achieve asking price.
Until the full report of this study is made public, let’s not throw out all the marketing research. It makes sense to present homes as well as possible. A little staging can’t hurt.
Update: February 21, 2014
As predicted, the Seiler study on staging is being widely reported and heatedly discussed. When a new scientific study comes out in other fields such as medicine, the findings are not adopted wholesale. Rather the findings area added to findings of other research studies before an opinion is formed.
In this case, I would like to refer readers to an earlier study which did show a positive impact on price from staging. It was done by Joy Valentine, a Broker Associate with Coldwell Banker in Los Altos, California. She analyzed 2,772 properties sold between March 1 and September 30, 1999, in eight cities: Atherton, Los Altos, Los Altos Hills, Menlo Park, Mountain View, Palo Alto, Portola Valley and Sunnyvale.
Credibility of her study is reinforced by:
- the large sample size,
- the fact there was some geographic distribution among 8 cities
- it studied real staging as opposed to virtual staging
- it compared actual completed transactions in a wide range of prices.
The results were summarized by Ms. Valentine in an article published March 24, 2000 in the Mountain View Voice.
She reported the following:
Out of that group, I took a sample of 129 properties that had been staged, or 4.7 percent of the total. This sample represented condominiums, townhouses and single-family residences. They ranged in list price from $229,000 to $4.8 million.
The following results show marked differences between the sample of staged homes and the total group, which consisted of both staged and unstaged properties.
For the group of 2,772 properties, the average number of days on the market was 30.9, and the average difference in sales price over list price was 1.6 percent.
For the sample of staged homes, the average number of days on the market was 13.9 — about half of the time for houses in the general sample. The average difference in selling price over list price was 6.3 percent, nearly four times as much as for the other group of homes.
Please note that the staged sample was not skewed by one or two outstanding properties. The homes in the sample were fairly similar in terms of days on the market and net sales difference.
The results of the Valentine study showed a clear impact of staging on price. The prices were moved up from 1.6% over list to 6.3% over list by staging. Taking out the impact of the hot market, that is an net upward change of 4.7% on the staged homes. On a $300,000 home, you would make an extra $14,100 from staging.
1. New York Times article http://online.wsj.com/news/articles/SB10001424052702303773704579268322983216550 By Sanette Tanaka, Dec. 26, 2013 5:31 p.m. ET