Dilemma of a home stager - when to charge?

By
Home Stager with Shift Property Styling

I am a firm believer that an upfront payment is the only way to go in the process of assisting clients sell their house particularly when I have my inventory sitting in their property for an extended period. It is that simple. I get my contract and payment and then the work is done.

But just recently I have been toying with the idea of a different pricing strategy whereby I get half up front and half at settlement of the sale of the home. While this is full of risks, the strategy may also increase the amount of business I could possibly receive as it would make the packages I offer most cost effective and more competitive. After all, no one LIKES spending money on their home at sale time and until the message that people are INVESTING in the sale of their home gets through then utilising a home stager is really all about the cost in the client's mind.

This way of thinking has come about after losing numerous potential jobs through clients not wanting to spend money up front on property styling and these are jobs that I could have got something from rather than nothing.

The strategy is fraught with danger in that:

a) I may receive the initial payment and not get the second payment

b) Not getting payment in advance drastically affects my cash flow initially (until hopefully the number of jobs increases paying me back)

c) Increased chance of damage/theft of stock through the client only paying half up front

d) long sale period and potentially longer settlement on sale meaning I may not get final payment for many months.

 

I would be interested to find out about others who have dabbled in payment plans other than upfront particularly those that own their own inventory.

 

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Rainmaker
181,995
Karen Dembsky
Peachtree Home Staging LLC, Home Staging in Atlanta, GA - Peachtree City, GA
Atlanta Home Staging

Just for fun -- here is a post I wrote well over a year ago regarding payment titled, " When you pay me depends on when I do you! "

http://activerain.com/blogsview/351496/when-you-pay-me-depends-on-when-i-do-you

that being said, times have changed; homes are sometimes bank owned . . . just the same; stick to your guns and be cautious! 

 

Aug 15, 2009 02:13 PM #1
Rainmaker
1,157,329
FN LN
Toronto, ON

Adam - You may find that many people do not have any extra funds at settlement time as they may be underwater on their mortgage and other debt.  You are better off collecting upfront.

Aug 15, 2009 04:47 PM #2
Rainmaker
152,485
Virginia Tatseos
Stage-Show-Sell - Bloomfield Township, MI

My jobs are half up front.  Half when finished and rent is due each month starting with the 4th month.   I get three months rent up front.

 

Aug 16, 2009 12:03 AM #3
Rainer
70,503
Pangaea Interior Design Kitchen & Bath Design, Remodeling
Portland Oregon - Portland, OR

This has been a real problem in the staging industry. Competitive stagers in our area who had a LOT of capital began doing this when the market was very busy. I did this for some clients because to NOT do it was going to lose me jobs. I don't bill to escrow anymore and the very large staging companies that used to do this are really pulling back on it. Since business has slowed down greatly due to the economy, they realized how very hard it is on cash flow to never know when you will get paid on inventory that is sitting out there. The last time I did this, the property was overpriced and sat for a whole year. I did get paid when they finally pulled it off the market ... it never did go into escrow. So, essentially, I had furniture on loan to them for a whole year, but did not make more money on that furniture than I did on other jobs that paid me each month. Not a good deal for me.

So, my best advice is not to do it. If you just feel you must, here are some tips.

1. charge more for this than for clients who pay as they go.

2. get an attorney to write you an iron clad contract covering all scenarios. The property may never go into escrow ... your client may go bankrupt before it sells or may go into foreclosure ... they may just pull it off the market without selling ... if the broker is your client as opposed to the seller, they may lose the listing before it sells.

3. See if your attorney can write the contract so that the seller grants you the right to put a lien on the property for payment.

Final advice ... don't do it. So many things that can go wrong.

Aug 16, 2009 12:17 AM #4
Rainmaker
823,218
Maureen Bray Portland OR Home Stager ~ Room Solutions Staging
Room Solutions Staging, Portland OR - Portland, OR
"Staging Consultations that Sell Portland Homes"

I agree with others who say ... don't do it.  Too risky since you have NO control over the factors that govern whether the listing is priced right, the market conditions, the seller's financial situation, etc.

Aug 16, 2009 05:12 AM #5
Rainmaker
109,452
David Peterson
Synergy Staging ~ specializing in vacant home staging - Portland, OR
Home Stager Portland OR-Synergy Staging-Portland Oregon

We've been asked about payment out of escrow and will not go down that road.  There are far too many unknowns, and especially in the current market, many homes are not selling for more than is owed, so there is nothing left at escrow.  I'd rather lose a job than do one and not get paid.  It's not worth it!

Aug 16, 2009 07:28 AM #6
Rainer
14,811
Wendy Carroll
Coeur d'Alene, ID

When we polled a group of Realtors about why they reluctant to sell, price was #1 and wanting to defer payment was #2.  So we offered to defer payment UNTIL THE CLIENT TERMINATED THE STAGING (not until it sold) and tacked on a 10% fee.

No takers.  I guess they didn't like the part about the additional fee. 

I would suggest you may the payment due when the staging is ended by the client, not when it sells.  What if it doesn't sell?  I'm not a lawyer and perhaps we should consult one for the right wording.  After all, what if the client never technically ends the staging and just leaves it there until you scurry over to protect your inventory because the house is basically abandoned?  On the other hand, we're in a small community and if a Realtor were to try this, word would get around.

Oh, and we do own 100% of our inventory.

Aug 16, 2009 03:25 PM #7
Rainmaker
2,197,978
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

I wouldn't do it.  Your inventory could become difficult to retrieve, if the house sits too long and the sellers lose the house...you not only don't get paid, you can't get your inventory back.  Too many issues for me to take the chance.

Aug 16, 2009 11:40 PM #8
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Rainer
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Adam Luttrell

Shift Property Styling - Hobart, Tasmania
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