The Economics of Everyday Things - 15. Home Staging

Episode Date: August 28, 2023

How do you turn an empty house into a buyer’s dream home? Zachary Crockett pulls back the curtain.

Imagine for a moment that you are buying your first home, the biggest purchase of your life. You walk into an open house and you see a pristine mid-century modern living room, the beautiful leather couch, the set of Eames arm chairs, the brass bar cart stocked with crystal glasses. In the kitchen, there's a bowl of perfect lemons. In the backyard, a crocheted hammock, wafes and the breeze. This is it, you say. This is the life I want. You have been sold on a dream, carefully curated by a home stager. There's some sort of weird and the most of the toward stagers like how we're basically faking homes. We are really trying to help buyers

imagine, okay, how can I move in here and then really maximize my return on investment. For the Freakonomics Radio Network, this is the economics of everyday things. I'm Zachary Crockett. Today, home staging. 50 years ago, people showing their homes to prospective buyers didn't do much more than tidy them up. That changed with the Seattle Realtor,

named Barb Shores. She saw an empty home as an opportunity to set a scene to sell a potential buyer on a vision. Shores registered a trademark on the term stage in a real estate context and advertised her services to home sellers in Washington. But it wasn't until 30 years later that staging really took off. Before online listings existed, there wasn't really a need to stage a home so much.

That's Karen Prince. She's an experienced home stager and the author of a book called Secrets of Home Staging. You would just go to your realtor and you'd say, here's what I'm looking for and my price range. And then they would take you to homes and you had no idea what you were going to be seeing. With the introduction of online listings, buyers could browse through photos of dozens of houses in their area before deciding whether or not to go to an open house. Sellers had to up their game and home staging became an expectation. Once some people started doing home staging, then it became necessary for more and more people

to keep doing it. A stature's job is to decorate and furnish a home in a way that attracts as many buyers as possible. Sometimes that involves removing all of the owner's belongings, schlepping in a truckload of furniture, and building a new look from scratch. Other times, it might just mean embellishing whatever is already in the hoe. Prince says that part of the reason this industry exists is that most buyers can't see the potential in an empty house. First of all, when they're looking at an empty room online, it's hard to tell what the room

even is. You know, is it a bedroom? Is it a living room? And then also, if you walk into an empty room, can we fit a king size bed in here, or can we only fit a full size? For home sellers, staging can be a sizable investment. The rule of thumb is that staging, which includes monthly rental fees for furniture

and other props, should cost between 1% and 3% of a home's asking price. Depending on the size of the home, most full stages cost anywhere from $2,000 to upwards of $25,000. But stagers say this cost is worth it. Industry surveys claim that staging a home can boost its price by up to 5%

and reduce the amount of time it takes to sell. A lot of times I'd be brought in to stage a home that had been on the market for a while. And so many times it would just sell immediately for way more than what their asking price was. A seller will often continue living in their stage-to-home while it's on the market. But, stages don't care about comfort or livability. Their sole focus is on enchanting the buyer. We're not just moving things into the space. Yeah, we're doing that, but it's with intention to get the best return investment for your

sale. Cindy Lynn runs a home staging course called Staged for More. Before starting your company, she was a stager in the San Francisco Bay Area for 11 years. Once you put your house on the market, it's a product. You're selling a house. Just like you're selling a car, you're going to get a detail. You're going to make it look as nice as possible. There's no one style that stagers use.

They typically tailor the furnishings to the vibe of the neighborhood. So if they have a lot of artisanal, local coffee shop, bakery, butcher, that kind of tells me there's a certain lifestyle within that neighborhood. So that means that the inventory we bring in needs to be a certain look and feel, maybe a color palette as well. The staging itself usually takes five or six hours. During a busy real estate season, Lynn would stage a home every day of the week.

Staging all those homes requires a lot of furniture or a stagers call it inventory. Small-time stagers might store their wares in a garage or a storage unit. More serious operations call for a warehouse. Yeah, we have, I think, about 35 sofas. 35 sofas? Wow. That's not considered a lot, actually, for a staging operation. I have, like, thousands of pillows.

Oh, my God. We have all sorts of side tables, all sorts of artwork and various sizes. Essentially, anything to dress a house. I even have real bread. We go to grocery store, we buy these French bread and they dry really nicely and they can sit in houses basically for years. Stagers will often look for attributes in a piece of furniture that most buyers wouldn't really care about.

I realized after pulling in and out of so many homes what actually I wanted was a couch that was really lightweight, which I would never have thought about for my own couch. So you look to see how much the couch weighs, and also the color in staging you want a light colored couch, which you don't necessarily want when you're living with it. The quality of it isn't all that important. It's more about aesthetics and price. I feel like sometimes staging is like an optical illusion, so to speak, we might actually expand the band by putting mattresses together or making it higher with bed risers. We might over stuff the bedding as well

and set one duvet into a duvet cover, we might do two. Or we stuff extra like cotton balls into corners of the pillowcases to make them super fluffy and stand out. Furniture is the lifeblood of the business. But it's also a depreciating asset. It goes down in value with every scratch and nick.

And stages have to keep track of the return on investment for each piece they buy. Usually, I would say if I have a sofa, I will want it to go out at least five times to make the money bag. This can be harder than it sounds. For starters, moving furniture around every week causes a lot of wear and tear. And people who visit open houses, they don't always treat stuff very well. We once had a throw, like a really nice throw actually on the bed, and then some kid braided her own hair into the blanket and then put bubble gum over it.

In Tennessee, one stager had an entire home worth of furniture cleaned out by thieves. Lynn has had to deal with robberies of her own. Though they were usually pretty minor. Once we had a house that came back, all the light bulbs were stolen. I'm pretty sure as a college kid, like, neat toilet paper and light bulbs, so they went to open house. I mean, I may or may not did similar thing when I was in college.

Stagers use their own eye and design sensibility to pick their inventory, but they can't go wild. Everything in a staged home needs to be vanilla. They need to present the home as a blank slate that's appealing to as many buyers as possible. And a big part of that is removing any hint of the current owner's personality. Deep personalization is important because

before a buyer will make an offer, they need to imagine themselves living in this space. If they see a bunch of personal photos of other people, they see, I don't know, sports teams that they don't like. Or they see religious items that are a different religion than them. It's really hard for people to look past all that and imagine themselves living there. I would be looking around the home thinking,

okay, what is going to turn buyers off? The first thing Prince usually eliminates is the house's smell. Well, often it's odors like cat pee, cat litter. There's some really, really offensive odors people have in their homes and that will just turn people off the moment they walk in. Some stages have faced steeper hurdles. Stripper pole, we've seen that a few times. What do you do with a stripper pole? We ask them to take that off. I mean, I don't know how well that thing is installed. That's liability for the seller.

Then there are certain artistic touches that buyers might not fully appreciate. A homeowner had a very personalized mural in their bathroom. Those are the things we will ask them to repaint over, because it's probably really inappropriate for people to come in and see your wife nude in the bathroom. You know, that's too personal, and that's all they're going to talk about once they love to house.

Most stages will want to get rid of any trace of you when they're setting up your house for sale. But if you're famous, it's a different story. That's coming up. In 1998, a woman named Meredith Bear was a screenwriter living in Hollywood. She was in her 50s and she didn't expect that she'd soon become the godmother of the modern home staging industry. But she had made her rental home look so nice that her landlord decided to sell it. She needed a place for her stuff.

I had a friend trying to sell a house and I said how about I bring over all my furniture and put it around your house and that will kind of show people, you know, the lifestyle they could have there. The house sold after I did that for half a million dollars over asking in two days to the head of one of the studios. And all of a sudden, everyone was calling me. All these brokers would you do this for me? Would you do this for me? And I went, sure.

Today, Bear runs one of America's largest home staging empires. Her company, Meredith Bear Home, stages 2,000 properties all over the country every year. And it specializes in the ultra high end market. We currently have a house at 10 Tarpa in Palm Beach that is its own private island that is for sale for $220 million. But most of them I would say are more in the, you know, the low would be a couple of million. Her services start at around $10,000

and can run up to $250,000 for a massive estate. She has 35 designers on staff, nearly 400,000 square feet of warehouse space, and an estimated $76 million worth of inventory. We have stacks and stacks and stacks of mattresses on shelves. We have rows and stacks and stacks of mattresses on shelves. We have rows and rows and rows of decorative pillows, of lamps, rows and rows and rows of floor lamps, table lamps. There's every kind of toy for kids' rooms and glasses just put next to the table casually you know look like someone just left them there fake cherries and fake lemons and oh my God we have a massive art department that just rows and rows and rows have art

different sizes different values values, different subjects. It's just anything you can imagine, some of the oddest things you've ever seen in your life, we probably have 50 antique wooden pitchforks. I don't know how they got there, some idea that someone had probably me at some point. And of course, her favorite prop that goes in every single home as she stages. We have a lucky pig. I once found this store that had this concrete pig that was just the cutest thing. The next thing I know I bought like 400 of them.

I would put them in the kitchen and whenever kids are around I say rub it on its back and make a wish and it'll come true She sources her stuff from all over the place Furniture shows across the world from Paris to Singapore Flea markets a state sales Some of it even comes from her own personal collection. I have my parents mid-century Pomecom bedroom set that still floats around all my houses. I have my grandmother's China that she never used it shows up in houses. Wow. I bet your grandma never thought her China would end up in

like a $40 million home somewhere in L.A. I'm sure she did it. The homes that bear stages belong to some of Los Angeles' most famous residents. Let's see, up top of my head, we staged for Janet Jackson, we staged for Merrill Street, O'Kelly Clarkson, Reese Witherspoon, but one of the first houses I ever staged. Oh gosh, Bob DeNiro, Scarlett, you had some junior husband had a stage and when they saw what we had done,

they said, I'm sorry, we're taking the house off the market. Can we buy all this? While most stages want to depersonalize a house, the celebrity game works the other way around. Normally we would ask, you know, get rid of those family photos. People want to imagine themselves there, not you. But if it is somebody really glamorous, we'll take the opposite approach and, you know, bow to them in the staging.

We get a house for a famous film director, and we asked him to leave, you know, his Academy Awards on the shelf Just seeing that is gonna really excite a buyer, right? Leave those photos with those movie stars out there But Karen Prince says that in some ways this is the same principle used in less glamorous homes In some ways, this is the same principle used in less glamorous homes. If you look at enough photos of homes on Zillow or Redfin, you'll start to see the same tricks used over and over again, a bowl of lemons on the kitchen counter,

an art book on the coffee table. The goal is to sell a buyer on an aspirational lifestyle. Because a new home feels like a chance for a reset. The bowls of lemons make a buyer think, oh, when I live here, I'll be eating healthy food. I'll be eating lots of fruit. One thing that I always thought was really great for staging is a hammock, anything that points towards having a relaxed,

healthy lifestyle helps sell a home. Unfortunately, what's appealing to buyers doesn't always go down well with the sellers. Most people don't like it. When you take their stuff away and you bring in new things, it's really unsettling. I mean, there was one client who broke down crying because she didn't like the furniture that I brought in. Cindy Lynn says that stagers might charge a premium to this kind of client.

There's the pain in the butt tax, right? If they know the client's going to be extra difficult, they might charge a little bit more to compensate the extra labor and time they have to spend dealing with that client. Recently though, the staging industry has had to deal with a bigger problem. The traditional business model is being shaken up by technology. There's something called virtual staging, which superimposes computer-generated furnishings on unaffurnished properties. It's a fraction of the price,

and it's increasingly popular for online listings. Lin for one is skeptical. When you see photos online, you have this expectation as a buyer. Because you look at photos, you're like, oh my god, this house looks amazing, but when you go in, it's completely empty. There's not a lot to see,

except like debt flies in the the corner or like spider webs. So there's kind of like a reality versus expectation issue. Agents have even started experimenting with virtual reality hardware. A potential home buyer will come to an empty property, pop on a headset, and choose what kind of fixtures they want to see from a menu of options. In Lin's opinion, these newfangled tactics take away something special, a certain emotional

history that can only be conveyed by real objects in a real space. Stagers can become highly attuned to those histories. As especially divorce houses, usually divorce homes are very like everything is stripped apart like a war had gone through. As a stager or any real estate professional, you are encountering people in different points of your lives and sometimes it's really the lowest point. The stager's job is to exercise those demons and make the house tell a different story, a story of plump mattresses, fresh lemons, and a concrete pig just brimming with good tidings. Do you know what?

It's romance. Some cute guy asks you for a date. You're not going to wear your old sweatpants with holes in them, are you? No, you're going to doll up. We want to make the house irresistible. We're gonna do everything we can to be as sexy as possible. [♪ OUTRO MUSIC PLAYING [♪ For the economics of everyday things, I'm Zachary Kraken.

[♪ OUTRO MUSIC PLAYING [♪ This episode was produced by Sarah Lilly, with help from Lyric Boudich and mixed by Jeremy Johnston. It definitely hurt stories, you know, like the SNM dungeon, which happens. What? The Freakonomics Radio Network, the hidden side of everything. Stitcher