Recently I was asked this question by a group of Realtors. After having my own home staging company for several years, and having done over 400 stages, it still surprises me that some people believe the agent should pay for staging a home.
Of course who pays, how and when are always up for negotiation. BUT, our experience shows that if the seller doesn't agree to pay for staging, they have no powerful incentive-in other words no skin in the game-to do teverything we recommend to sell their property. Also if they aren't paying for the time that the furnishings are in their property, they aren't nearly as motivated to accept offers or to price their home correctly for sale.
Staging is an investment in making certain the listing sells for the highest price and in the shortest time frame. To accomplish this the seller must be committed to pricing the home based on realistic market indicators; to prepare the property according to our directions for showings both before the home goes on the market and while it is listed and to give careful consideration to any and all offers which are presented.
It's a fact that staging is designed to improve the appearance and appeal of a seller's property, which is where the seller is usually living. If the property is already in perfect showing condition and presents as well as possible from a design and layout standpoint, then staging isn't necessary. Clearly, sellers are the ones who financially benefit from staging since they will be enjoying considerably higher net proceeds at closing, typically at least 5% higher. So logically, staging is a cost that is most often borne by sellers.
We've worked with agents who've paid for staging up front plus the monthly renewals and learned the hard way that when a property doesn't sell staging fees can eat up their entire commission. For example, a $250,000 listing would normally cost between $2000-$2500 for a two month staging. The renewal per month afterward would run approximately $800-$1100. Think about it, if a property sits on the market for 6 months the agent has paid at a minimum $5200 for a six month staging on their listing. If the agent's gross commission on the sale is 3% ($7500 at best) then the agent's adjusted commission after staging costs is $2300-before any broker splits, or advertsing or listing management costs OR the agent's time are accounted for. Talk about an expensive listing! Yikes!
If you are willing to share in the costs of staging we recommend you do so when the property actually sells and only make your contribution from your closing check. It is a very good idea to put a maximum on the amount you'll pay toward the staging, for example: agree to pay half of the staging costs at the close of escrow and only for the first two months of staging. Using our previous example you'd be limited to $1250 in your staging investment, and would only contribute when the home has sold. This reduces your exposure and guarantees that the seller is also 'invested' in making sure their home sells.
Home staging, when done correctly, is the best possible way to maximize offers on your listings and to shorten market times. If you manage your contributions wisely and price the property correctly then you assure that your listings will sell quickly and for top dollar and your clients will be happy at the closing table.