I keep hearing from home sellers dismayed by their real estate agents recommending price reductions because their home hasn’t sold.
Notice that while this happens more often in slower real estate markets, it also happens in a hot market.
There are always those homes that don’t sell as fast as you’d expect for a whole bunch of reasons.
Not the least of which is how badly it shows! And that’s where home stagers make all the difference.
Why are agents so quick to drop real estate prices?
Consider that a real estate agent is financially motivated to give this advice by their commission structure. This advice may not always be in their client’s best interest.
If the seller’s agent is only getting 2.5 percent (or less) of the selling price and he/she has to give half of that to the broker, when the client drops his price $10,000 it only means a cut of $125 (at most) in the agent’s commission!
Of course it’s costing the homeowner $10,000 (plus commissions)!
That’s why many real estate agents will suggest a price drop before introducing the subject of how home staging can improve how well the home shows.
Dropping the asking price is a quick/easy solution for the real estate agent. Consider that in many cases home staging will cost the homeowner far less than the $10,000 price cut, and dramatically increase his chance of selling at the original price.
Now, I’ve only used a $10,000 price drop in this example. Depending on the original asking price, the real estate agent’s requested price drop can be significantly higher.
For example, one of my home staging clients had a home listed for $949,900 in a really hot real estate market. The home had tons of showings and everyone said it was nice, but it wasn’t selling. So the agent asked my client to drop his price to $899,900 to bring in more potential buyers.
That’s a $50,000 real estate price drop!
It would cost the real estate agent less than $600 in lost commissions and it would cost my client over $50,000. So who do you think was most motivated to try (and pay for) home staging instead of that price drop?
My home staging client spent just over $1000 with me for a few hours of my time/advice and got 98% of his original asking price.
As you can imagine, he thought my fee was a bargain considering what he was facing instead.
Real estate agents are important to us as Home Stagers. But, don’t make the mistake of relying exclusively on them to promote your home staging business. I discuss this at length, and how to market smarter, in course 4 of The Staging Diva Home Staging Business Training Program.
Cornelia van Heezik says
Hi Debra: Read your article on Realtors® who don’t recommend staging. I am a Realtor® and have decided to do home staging because I saw a lovely older home that really needed staging, an estate sale.It was worth over $525K and sold for only $395K.The market in Victoria is somewhat slow, but that really upset me.Have seen many ‘low ball’ sales My first license was in 1981, always interested in design, so I am starting soon. I’ll be the “staging” Realtor and hope to help a lot of people. Thanks for your comments, very much appreciated,Cornelia
Debra Gould says
Cornelia, always nice to hear from a real estate agent who understands the value of staging!
You can certainly help a lot of people by ensuring their homes are decorated to sell quickly and for the highest possible price — after all that’s a total fit for what ** should ** be the goal of any Realtor who has their clients’ best interests in mind.
That said, unless you are going to be charging for your staging services, I encourage you to hire, or recommend, home stagers for that part of the job. This will allow you to devote your time to getting listings, showing lists, promoting listings and closing deals — which is where you make your money and presumably what you do best.
Many agents have taken the Staging Diva program if they intend to be home stagers who also happen to have their real estate licenses. In other words, it’s a shift in the philosophy of how they do business and a move away from being entirely dependent on real estate commissions. Most of my home staging clients have yet to hire an agent. Once I’m done with their homes, they’d happily list with me (because of all the trust and rapport that has built up during the transformation of their home). I refer them on because I’m not a real estate agent. My point is, that home staging is a great lead generator for agents!
I’ve written a Home Staging FAQ for Real Estate Agents page that you might find helpful for more information.
Lynn Batchelor says
I must say….it is all for the realtor….they just cram and cram till they get the listing then rush rush to get it sold and at the sellers loss….every time….they would rather their clients lost money than hang onto a listed home…..god forbid if that wrre to happen but now at least people are getting smarter ….there is no reason at all to drop your listing price how much you are out compared to the realtor….their are a scam artists as far as I am concerned…they only work for themselves not the home owner for if they did there would be no dropped prices….
they loose a fraction to what a home owner losses when a price is dropped…..if you are smart you will stay away from them all together…never ever work with one I bought and sold 6 home myself and made money on each sale and not once did I lower my price nor ask anyone to lower their price…
Debra Gould says
Thanks for sharing your experience Lynn. Given your comments, I think you’ll enjoy an article I wrote a few years back, Freakonomics has lots to say about real estate agents.