5 Tips For Protecting Your Commission When Staging
Home Staging adds value to the sale and client experience, but it shouldn't break the bank! As a real estate agent in the Greater Toronto Area, use these five tips to protect your real estate income when offering home staging as part of your listing process.
Real estate agents offer a range of listing preparation services to differentiate themselves from competing agents. Along with home staging, some Agents offer to pay for services such as, small renovations, painting the house, moving/packing services, hotel stays, landscaping, storage rental, driveway paving, carpet cleaning, window washing, and so on. By offering these additional services, these agents gain a competitive advantage along with the assurance of having the property show-ready.
The front-runner is home staging because it benefits the Agent as well as the seller. By hiring a professional home stager to provide a staging consultation the seller receives a detailed assessment of the property along with information on what to do room by room to prepare the home for sale. A home staging consultation costs between $250 - $550 around the GTA. Many agents make this investment on behalf of their clients as part of their marketing strategy.
What happens if the home requires more than a staging consultation? There are houses that need additional furniture, artwork, and accessories to complete important rooms or fully furnish areas missing furniture. Nowadays many agents are offering to pay for staging fees because they know staging will drastically improve the presentation of the home thus, helping it sell faster and for top dollar. It's a win-win for both parties.
With the market always changing its become more imperative for real estate agents to be mindful of protecting their commission. Here are five tips to keep in mind when including home staging as part of your listing services:
1. Get an estimate for the home staging before you establish your commission with the seller.
Real estate agents who pay for home staging use this add-on service as a way of justifying being paid more commission than an agent who is not offering home staging. Depending on the staging estimate, you could increase your commission percentage by 0.25 or 0.50 percent to pay for the initial staging. If you're professionally staging a luxury property, you can justify increasing your commission by 1 percent. An experienced stager can provide a price range but remember, prices are not guaranteed until the property is evaluated in person.
2. Clearly spell out what you're covering and the terms around it.
It's important to be clear on what you're planning to contribute towards staging and have it clarified in your contract with the seller. There is risk involved if the seller cancels the listing or damages the staging inventory (read: What Every Agent Should Ask Before Hiring A Stager) You should have a clause that protects you against these expenses if the seller terminates. "If for any reason the house is removed from active listing, or other changes occur (your name) will be paid in full for the staging investment paid on behalf of (seller's name)." If you're just providing the consultation as part of your services then you should include something to the effect of, "(Your Name) will pay for the services of a professional home staging consultation where you will receive detailed recommendations on what to do to prepare your house for sale. Any additional staging services including but not limited to (list here) will be paid by (seller's name). Please reach out to a real estate lawyer to review your contract to ensure you are protected.
3. Always cap the amount you're contributing towards the home staging.
If the house takes longer than a month to sell, you will be on the hook for staging renewals with the seller unless your contract is black and white on the maximum staging investment on your part. When agents don’t cap the amount they’re contributing, the ongoing inventory fee is added to the amount paid by the agent, this eats away from your commission. This could add up to thousands of dollars, and when the seller is benefiting the most from the sale - they should be the ones paying for the staging renewals.
4. Team up with a Stager who can be creative with your staging budget.
A good home staging company knows how to get creative with any budget. An experienced stager knows how to best utilize every dollar to make it count. There are real estate agents who have a set staging budget regardless of the size of the home and what's required. If you fall under this category, discuss your budget with your home stager to see how best it can be maximized to benefit the property to achieve results.
5. Always share how much the home staging service is valued at to the seller.
Unfortunately, there is no value in free. When you share how much the services are worth and what these services will do for the seller, the seller will be more committed to the process and appreciative of your investment. Let your client see how much you're investing in their success. This applies to home staging and any big ticket services you're offering.