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A Test: Will Staging Help Sell A Vacant REO Property?

I recently listed an REO: a spacious 3 Bedroom/2 Bath condo. This condo was "aesthestically-challenged", with drab colors on the walls, ceilings that were painted shoddily, crown molding installed upside down, some faux-pax rooms, and even some crown molding used as chair rail in the dining room. The Asset Manager agreed to have it freshly painted and professionally cleaned - and then to lure buyers with photos, I decided to stage the property (absorbed into my costs).



Obviously I can't absorb the costs and stage every property, but this was a test for me as I wanted to see if it would bring in additional Buyers. We all know Buyers love photos - and the photos of empty, vacant rooms were not helping tell the whole story of how nice this place could be. Plus the number of competing properties in this area is very high. I have all my residential listings staged, and I market REO listings with the same type brochures and same websites as I market a residential listing (plus a few additional REO sites)



The outcome: The property is still listed, after 121 days on the market, 2 small price reductions and a dismal 7 showings. It actually had a chance of selling at the higher price when it was first listed, but the declining market (in this particular area) has not helped. Add that to the fact that Buyers can find attached townhomes (a few REOs) in the area for the same price.

So my question: has anyone else tested this and staged any of their REO listings? And would you do it again?

Dee
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Comment by Seb Frey on June 24, 2008 at 11:41pm
Hi Dee, I hope they buy it! I am all about marketing my REOs to the best of my ability, but I don't know about a stigma with bank-owned properties. They seem pretty popular, and buyers overhwelmingly prefer them to the other right-priced alternative: short sales. I think that if a property is over-priced for the market, that staging it is not going to make a big difference. If it's right-priced, but is not moving, staging it will probably be what tips a buyer in the property's favor.
Comment by Dee Dawson on June 24, 2008 at 2:59pm
Good point Johhny. Condos are definitely sitting longer.
Hey, I just had a call from an Agent who showed it, thought it was very nice and wondered how such a nice property ended up as an REO. Her and her client were headed back to do the numbers. Will keep you posted...fingers crossed...
Comment by Johnny Huang on June 20, 2008 at 12:31pm
My thinking is that condos are a tough sell these days when the buyers can choose a nice detached house with no HOA fees for almost the same price. In my area, condos sit on the market very long, regardless of condition.
Comment by Dee Dawson on June 20, 2008 at 10:10am
Hi Seb -I agree with you to a point. But I also think our industry may be doing a disservice to their clients if an Agent is not marketing a property to the best of their ability. Just because a property is bank-owned, does that mean it must be marketed only on price? Or is there a way to break the stigma with a property that looks nicer than others. What did I just read... that for every 1 REO in a community the values in a neighborhood drop by 1%. Stopping that cycle in a neighborhood may not be possible -- but I would like my REO listing to sell before other REO comps - and I believe that's why I was hired. Otherwise I'm just chasing the market down if another Agent's REO price is lowered based on their clients decision....vicious cycle. JMHO
Comment by Seb Frey on June 19, 2008 at 9:34pm
I came across an REO that was staged yesterday. It blew me away. I was like, "Woah, these guys are crazy." I mean, it showed well. They had painted it and put in a new door. But there was no disguising the house, really - an older, smaller home on a sloping lot on a somewhat crappy street, priced about $40K (12%) too high. I think price is what sells these properties, really. There's just too much to choose from, I think you really need to compete on price in this market segment. If you're competing against non-REO properties then staging perhaps makes sense (a lot of your competition will be staged, or have nice furnishings, etc.) but all these REOs are vacant, and they compete pretty much on price.
Comment by Cheryl Waitt on June 17, 2008 at 10:55pm
Hi Everyone, I think we have more of a challenge with this market when Staging. I did stage a condo that actually needed paint and carpets (80's mauve) you guys know the drill. Well the place showed terrible but after incorporating some complimentary pieces in, the condo did sell and the comments from the showings were much better. What I learned was the seller probably would not have realized any more gain by painting etc. but there is a definate benefit of staging any property.
Comment by Dee Dawson on June 17, 2008 at 9:59am
Hi Rosemary
I also believe staging does set a listing apart from the crowd, but I'm not sure if that's what people want. I recently spoke to a (different) Stager who presented at our office, and they suggest the minimum staging for REOs, ie.: art, plants, spiffing up the bathroom. I just don't believe that will help with the photos, and photos are definitely a way to get the Buyers in the door. Of course low prices also get Buyers in the door, but price is not our decision to make.
Comment by Rosemary A. Shirley on June 16, 2008 at 11:41am
Hi Dee, It's funny -- I was just thinking about staging my next REO listing (also a 3/2 condo) to test the market. I had it cleaned and will have the carpet steam cleaned. Since it is one of the better units, I figured staging might set it apart from the other distressed sales in the area. Thanks for sharing your experience... Now I'm re-thinking my plan. I may still do it just to see what the market in my area will bring out -- lots of first time home buyers are now out and about!

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