In many cases, when you want to flip a house, time is of the essence. Each day that you hold onto a house you will have to pay insurance, taxes, and other associated costs. If you are already investing considerable amounts of time and money into renovating the home, leaving the home in your possession a few extra months or even a year can chip away at your profits and frustrate you to no end. Unfortunately, in some markets, homes sell slowly, while for investors who have rehabilitated a house the option of lowering the asking price just to get a quicker sale is often not an option.
A better option is home staging. Home staging has two aims that might be of interest to the investor. Home staging aims to sell a house more quickly, and it aims to sell it for more. Home staging does add a layer of complexity to your deal. You will need to plan the house staging, budget for it, and execute it. Unless you're hiring a professional home stager -- which can be expensive -- you will have to do much of the dirty work yourself. However, the payoff can be great. If done right, home staging can take a house off your hands in days or weeks and can also ensure that you get the best possible price for the home.
A recent article that ran in The Westmount Examiner points out that between January and July 2007 in Montreal, a single family house took, on average, 79 days to sell and sold for 95% of the asking price. A condominium in the same city and in the same time frame took an average of 92 days to sell and sold for 96% of the asking price. This is an increase over 2005, when the average single family home sold in 71 days and the condo sold in 76 days, on average. The shifts can be a sign of a slowing market, and the savvy investor will be careful. 79 days rather than 71 days may not seem like a big difference, but you are paying for maintenance costs daily and for each of those days you are actually not making any profit. Plus, consider that these are only averages. The market you are in may take much longer, and your actual property may take longer to sell as well.
Of course, having a desirable property and desirable neighborhood is half the battle, but in today's market that may simply not be enough, according to The Westmount Examiner article. If you want to flip a house, especially, being able to sell quickly and for a profit is important. However, all the statistics about people buying under the asking price can put a dent in your plans. If you're counting on 100% of the asking price in order to make a good profit, that 5% difference can mean tens of thousands of dollars less profit for you.
The Westmount Examiner article notes that a 2003 survey organized by HomeGain polled 2,000 realtors and showed that staging a home can create returns of 160% up to 600% on the investment. Even if we take these statistics with a grain of salt, the fact is, home staging can speed up the selling process and can mean a good return on investment.
