Part two of a series taking you through the time and cost savings our Home Builder clients experience when working with our Design and Staging team.
The Strength of Staging
As professional home stagers, we continue to see the benefits and value of a well-staged home. In fact, according to the Real Estate Staging Association (RESA), staged homes still see overall better results than non-staged homes. They typically see higher bids and purchase prices, less time on the market, more showings, and higher online viewing rates.
These benefits all work towards a sound ROI for home builders and sellers; however, as we continue to work closely with builders into 2022, we have seen a shift in the mentality and approach towards Model Home Staging.
The Staging Spectrum
While some home builders continue to professionally stage their model homes, others have started to explore alternative options: opting to either leave model homes completely un-staged or lean towards the other end of the spectrum by taking on staging as part of the internal marketing process. While both of these options speak to the intention of cost savings, we have seen some builders experience quite the opposite and end up paying more in the long-run.
In this post, we’ll explore the two alternative options to hiring a professional home stager, reveal the potential hidden costs, and provide solutions that benefit the profit margins of our home builder friends.
“I Don’t Need to Stage”
As we discussed in our previous blog post, 3 Ways an Interior Designer Can Save You Money on Your Home Building Project, the demand for suburban new builds, custom homes and resale homes is at an all-time high, providing favorable conditions for a sellers market. These conditions have sparked a false confidence that un-staged homes will sell just as fast as staged homes. As a result, Home Builders have been opting out of staging all together.
While it is likely that new builds will sell relatively quickly in this market, it’s not guaranteed. We urge our builders to err on the side of caution with this mentality because the fact of the matter is that some homes, for whatever reason or another, remain unsold for extended periods of time regardless of the current market conditions. It happens more than you think and more than developers care to admit.
Another factor to consider as you plan for 2022 is the impact of interest rates on consumer spending and purchase behaviour. What is your plan for the curb in affordability once borrowing becomes more expensive? How are you going to differentiate your brand to compete with other builders?
A recent article published by the Financial Post indicated that the Bank of Canada could increase the rate of borrowing as early as April 2022, right at the beginning of real estate season.
In our eight years of working alongside Home Builders, we have been called in several times at the eleventh hour to stage Model Homes that were standing too long and holding up the builder’s time and resources. By the time we get the call, builders are in a time crunch, hit the panic button, and end up paying for staging that could have already helped sell off the inventory at the beginning of the sales cycle. Not the most ideal scenario, especially as we’re on the cusp of an interest rate hike.
The Solution: Shift the gears back from panic to proactive.
We’re always happy to help builders in their time of need but we highly recommend the proactive approach when it comes to Model Home Staging. It could end up saving you valuable project time and money without having to push that panic button at the last minute.
And as consumers begin to tighten their belts again with the higher interest rates, Model Home Staging will be as necessary as ever to differentiate your brand and offer buyers the highest value for their investment.
Check out our case study on White Cedar Estates developed by our friends at Dunsire Developments – a must-read about the process and value of a well-planned and executed Model Home stage.
“We’re Going to Stage In-House”
The second alternative falls on the opposite end of the Model Home Staging spectrum, where Home Builders and Developers are taking on staging as part of their in-house business model. The DIY approach is something to consider, especially for larger developers, but what about the small and medium enterprises (SME’s) who have tighter budgets, less staff and fewer resources? Bringing staging in-house is a huge undertaking that comes with a hefty, long-term price tag. Let’s consider the costs involved:
Hiring & Onboarding:
Small and medium-sizes businesses generally pay more for onboarding and training than larger businesses. This is because small businesses have fewer people and less time for dedicated training. On average it will take between 3 months to 1 year to onboard 1 new staff member – let alone creating an in-house staging team. Home Builders will need to be prepared for the recruitment costs, time investment and possible turnover associated with the hiring process.
Furniture & Inventory:
The sourcing and purchasing of furniture sounds easy and perhaps fun on the surface but it’s a much more involved and time consuming process when done through the lens of a staging-based strategy.
The challenge is to not only source furniture, decor, accessories and artwork that will create a cohesive and complementary look within a model home, they will also need to continue refreshing their inventory on a regular basis to replace worn and damaged items, and even more so to keep up with changing design trends. The up-front costs will also double if builders have more than one model home to stage.
Storage and Logistics:
When was the last time you tried to order furniture or any item related to home furnishing? We’ve said it before and we’ll say it again that one of the most common issues this industry is facing is the availability (or lack thereof) and lengthy shipping delays of home-related goods. This will be particularly challenging if you are in a time crunch to stage a Model Home. Where’s that panic button?
If you are intending on making the investment to purchase furniture, transporting and storing furniture will also become an ongoing overhead cost that is often overlooked. Will you purchase a fleet? Or will you outsource movers? You’ll also need to purchase insurance! At every turn, you can expect an expense of some sort.
The Furniture Rental Solution:
Much like our advice with Home Builder Interior Design projects, we can’t stress enough of the importance of collaboration as a means to help grow your business, especially at a time when interest rates are rising, competition is fierce and you’re focusing on your business goals.
And although we don’t have all the answers, we can certainly speak to the benefits as well as offer solutions for whatever approach to Model Home Staging you choose. If you are thinking about purchasing your own furniture inventory but you’re not quite ready, our Furniture Rental Program is the perfect way to have your Model Home Staged while keeping your budget and bottom-line in check:
The Furniture Purchase Solution:
If you are prepared and set on making the long-term investment of in-house staging, we can help save you costs on your initial investment through our Builder-Exclusive Purchase Program:
To 2022 and Beyond
As you move forward towards 2022 and beyond, we advise you to revisit the core of your business, your goals and whether or not you want to refocus your business model. Where you land on the Model Home Staging spectrum will have a profound effect on the operations and success of your business.
And as we speak from eleven years of experience of seeing all sides of the spectrum, we can say that Model Home Staging is a challenging business on its own and one that demands continuous refinement of management and process. The good news is that we are here to help you achieve your goals no matter which direction you choose, because at the end of the day collaboration always wins over competition.