The ROI of Home Staging

Unlocking maximum value in real estate sales

When it comes to selling a home, first impressions can make or break a sale. Despite this, many homeowners, Realtors, and real estate investors dismiss home staging as an unnecessary expense. In reality, home staging is a powerful marketing tool that can significantly increase both the speed of sale and the final selling price. Rather than being a cost, home staging is an investment with measurable returns. Understanding its Return on Investment (ROI) can help you make informed decisions when preparing a property for market.

The Basics of ROI
Before we dive into the specifics of home staging, let's quickly review the general concept of ROI. ROI is a financial ratio that measures the profitability of an investment relative to its cost. In other words, it is the ratio of the additional profit divided by the cost.

The formula for Return on Investment (ROI) is:

ROI = Net Profit / Cost × 100

Where:

Net Profit = Total Revenue - Total Costs
Cost = Initial amount invested

For example, as an investor, if you invest $250,000 in a property (purchase price plus all rehab and holding costs) and get $300,000 after all selling expenses, your net profit is $50,000.

ROI = (300,000 – 250,000) / 250,000 x 100 = 20%

Not a shabby return for a fix and flip investor!

If you are the homeowner, the above formula still holds true. If you bought your home for $250,000 and sold it for $300,000 after selling expenses, your profit would be $50,000 or an ROI of 20%.

Calculating the ROI of Home Staging
Let’s dive a little deeper into home staging. To calculate the ROI of home staging, you'll need to gather the following information:

Cost of Staging: This includes fees paid to the home stager, including their time to initially view the home, pull the appropriate furniture and accessories from their warehouse, load their truck, stage the home, destage the home and return everything to their warehouse after due diligence and before closing. This also includes the time and expense of travelling to and from the home for viewing, staging, and destaging.
Increased Sales Price: This is the difference between the expected selling price with staging minus the expected selling price without staging. This number depends on local market conditions, location, the home itself, and many other factors. Data does show that staged homes do sell for more than unstaged homes.
Reduced Time on Market: This is the difference between the selling time of a staged home versus the selling time of an unstaged home. Data also shows that staged homes sell much faster than unstaged homes.
Holding Costs: This is the monthly expense while the home is on the market, often overlooked when considering the real value of home staging. This may include mortgage or loan costs, insurance, utilities, lawn care, and any other expenses related to maintaining the home. If a home sells in 2 months with staging vs. 4 months without staging, then 2 months of holding costs are saved---adding value to the increased sales price.

So let’s look at a specific home staging example. Numerous studies have shown that staged homes sell up to 88% faster and for up to 20% more than non-staged homes. For our purposes, let’s be very, very conservative for an average home in our local market.

Cost of Staging: $3,000
Increased Sales Price: $10,000
Reduced Time on Market: 1 month
Holding Costs: $2,000/month

Net Profit = (Increased Sales Price + Holding Costs Saved - Staging Cost)
= (10,000 + 2,000 – 3,000) = 9,000
ROI = Net Profit / Cost x 100 = 9,000 / 3,000 x 100 = 300%

A 300% ROI means that for every $1 invested in home staging, you get a $3 return. Or, to level this up to the example above, if you invest $3,000 to stage the home, sell it 1 month faster, and get a $10,000 higher sale price, you gained $9,000 from the investment in home staging---3 times the amount invested! That is a great return, and one which I wish we could all get in the stock market!

Conclusion
Home staging is not just about making a property look good—it’s about increasing its market value and selling it faster. By understanding the ROI of home staging, homeowners, Realtors, and real estate investors can make smarter, data-backed decisions that lead to faster sales and higher profits. In the world of real estate, staging is one of the best investments you can make for maximizing returns.