Home Staging and Appraisals: How to Avoid Disappointment
Few steps to selling a home are as important as the home appraisal. For many homeowners hoping to get a boost in their home’s value, “staging” their home to make it more attractive and appealing seems like an obvious strategy. Unfortunately, not all sellers have a clear understanding of how home staging does and doesn’t affect appraised value.
Yes, it’s true that staging your listed home is often a smart move – but it’s not a magic shortcut to a higher sale price. Here’s what staging your home can do for you – and what it can’t.
What Home Staging Looks Like in 2016
Just what is home staging these days? Home staging experts say the primary goal of staging is twofold: eliminating clutter that might distract potential buyers from seeing the benefits of your home, while also helping buyers imagine themselves living in the home. As far as what steps sellers should take to stage their home, advice is wide-ranging – from a fresh coat of paint to rented furniture and new landscaping, to more involved remodeling.
First impressions are big in home staging. Landscaping updates and new doors can help in that respect. A fresh coat of paint, especially on-trend colors or neutral colors that offer a subtle, positive impression, is common. Well-placed accessories and carefully chosen furniture that work with the style of the home and create a similarly positive impression are also current big trends.
Other home staging recommendations are more dubious. New granite in the kitchen or a new wooden deck out back could add some value to your home, but a seller would be unlikely to recoup the full cost of that improvement, especially if they sell right after a remodel.
How Appraisals Work in 2016
Today’s home appraisals aim to deliver an accurate market value that’s supported by facts and data. While some updates may affect a home’s value, you may be surprised at which updates do and do not factor in.
In the post-housing bust era, superficial home staging details are unlikely to influence a home’s value. That’s because most lenders are very meticulous when it comes to what factors into an appraisal. Many also employ automated valuation models to confirm property valuation reports are accurate.
The caution lenders and appraisers take with home values hasn’t gone unnoticed. Since 2014, Quicken Loans National Home Price Perception Index (HPPI) has been tracking the gap between what experts and homeowners say homes are worth. For most of 2016, homeowners have overestimated the values of their homes by around two percent.
Still, there’s a place for certain home updates when it comes time for an appraisal. Real estate blog The Truth About Realty points out that comparable home sales play a big role in a subject property’s appraisal and that getting compared to pricier homes in your area could potentially improve your appraised value. However, the challenge is balancing improvements, such as updated kitchens and finished basements or attics, without over-improving for your specific neighborhood.
Another type of “staging” could benefit your appraisal, and that’s making sure your home has little to no deferred maintenance. That means that all your appliances and house systems, from the garage door to the stove to the HVAC, are in good working order. Your appraisal, your buyer offers, and even lender financing could suffer if your home’s maintenance has been neglected.
Why Staging Is Unlikely to Increase the Sales Price
Staging is a common suggestion for buyers from their real estate agents, but some question its effectiveness. In some cases, it depends on the buyer and in others, on the local market.
In an in-depth study from 2014, researchers found that staging didn’t make a significant difference to buyers. Researchers who showed a group of buyers virtual tours of a $200,000 property said that “unattractive” wall colors, unfurnished visuals of a home, and even visual representations with “ugly” digitized furniture didn’t make much difference to more than 800 surveyed homebuyers.
Most buyers were savvy and could see beyond an odd wall paint color or less-than-ideal furniture choices. However, that’s not necessarily true of all buyers. Some buyers may be more swayed by good staging. There’s also the question of the local market. In a competitive seller’s market, staging may give a boost to a home’s price. However, the effect could be more muted in a less competitive market.
Avoiding Slower, Lower Offers and Concessions
Staging does have its advocates, however. A study by the International Association of Home Staging Professionals found that staged homes have an offer within a short 11 days on the market. By contrast, the same group found non-staged homes were listed for an average of 90 days before selling.
There’s also the likelihood that the longer a home is on the market, the more likely its price is to be reduced. True, that’s not indicative of an appraisal value, but a reduced listing price typically means a lower final sales price.
Unstaged homes may also be subject to more seller concessions, according to industry figures. Staged homes are typically viewed as better maintained properties, which leads buyers to ask for fewer such concessions on the sale.
Staging for a Quick Sale, Not a Higher Appraisal
The biggest advantage of home staging is with helping a home sell quickly, without a price reduction, and with fewer concessions. While most staging efforts may have little effect on the appraisal process, a well-staged home could sell faster and easier, putting sellers on the path to closing on a fair and favorable offer.