What Are You Paying Me For? A Four-Part Series About Price & Value – Part 4 – Inventory

| March 28, 2018 | Comments (0)

What Are You Paying Me For? A Four-Part Series About Price & Value – Part 4 – Inventory

By Jennie Norris, ASP Master, IAHSP®, Chairwoman, IAHSP®,

President & CEO, Stagedhomes.com and Owner of Sensational Home Staging

In this series of 4 articles on what you pay for when hiring a professional Home Stager, this last article covers the inventory investment for houses that need a little or a lot of pizzazz to attract a buyer.

 

I hear this question a lot: “When it comes to renting items for Staging why can’t they just sit for FREE in a house until it sells?”   I know many believe that Stagers just pull furniture from their own houses and use it for Staging versus understanding that it is a BUSINESS and providing inventory is part of an overall business strategy whereby a Stager can earn income off the acquisition and use of inventory for vacant and occupied houses.

 

What is inventory?  Inventory consists of décor and furnishings used to add visual appeal to a property.  The inventory can be a few items to help enhance a Seller’s existing things to help add “Wow Factor” or inventory can be furniture and décor to help furnish a vacant house.  Therefore inventory can be sofas, chairs, tables, lamps, artwork, bedding, accessories, greenery, furniture, rugs, and so forth.

In a Vacant Property, inventory is brought in to make the house show its best to buyers.  A Stager may Stage the key rooms or the whole house.  It depends on the property and budget.

Sometimes, a professional Home Stager brings inventory into an Occupied Home as a convenience to the Seller – so that they do not have to purchase extra items, store them, or move them to a new property.

Not all Stagers stage Vacant properties, and not all Stagers do hands-on Staging in an owner occupied house where they have to bring inventory in to add “WOW” Factor.  Many Stagers prefer their inventory not be placed in an occupied house because of the risk of soil and damage from the people in the house, children, pets, etc.

 

Capital Outlay:  Inventory is not free – it costs money.  Depending on the business a Stager owns, the investment in inventory will vary.  It could be a few thousand dollars of outlay to hundreds of thousands of dollars invested in inventory, or more!   The Stager has to anticipate colors, styles and quantities of furniture needed to support their projects.  Depending on how many houses a Stager wants to Stage, they will have a small amount of inventory to a large warehouse. Think about this the next time you need artwork or décor, and understand where these items come from for a Stager.  This is part of their business model, and inventory provides income – from a small amount to a major income stream.

 

Inventory = Overhead:  When an item is purchased it becomes an overhead expense and property of the company.  Professional Stagers are not just pulling stuff out of their houses to stick in a vacant house or to help spiff up house that needs some pizzazz.  They make an investment in selecting things that are universally appealing, will enhance a house, and make it look better for the buying public.  They must also consider the style of the house they are Staging – not every piece of décor is useful in every house for sale.  Therefore, we have to purchase things specific for types of properties as well.

 

Inventory = Insurance Coverage:  Stagers have insurance policies not only for liability to protect the property, but also for their inventory to protect it from theft or damage.  This is a monthly or annual expense for a Staging Business Owner.

 

Think about this:  That piece of furniture, lamp, vase or chair costs money every time it is moved or used.  There is labor involved, gas and time.

 

When it is stored – there is often overhead costs associated with warehouse or storage unit space.

 

Inventory Management Systems:  In recent years some really great inventory management systems have emerged to help Stagers keep track of what they own.  This is another expense that is part of the process of owning inventory and is factored into the pricing of rental furniture items.

 

Things get damaged in houses – from careless homeowners who may paint interiors, mistreat inventory, or by Buyers that break something or use something inappropriately.  Things even get stolen which is a total loss to the Home Stager.

 

These costs have to be covered by the renting of the items.  Furthermore, an item that is purchased for inventory usually does not pay for itself the first time it goes to the show.  It can take 2-10 months for an item to be paid off, depending on how much it cost and how much it rents for on a monthly basis.  Until the inventory is in the profit zone, the Stager runs in the red.

 

Before any Stager turns a profit from “stuff” they bring into a house, they must first cover their overhead expenses of managing and maintaining that inventory, and then pay for the transportation of those items to and from the house.

 

  • Moving costs average $200 each way per project for 2 men and a truck.
  • A small Storage Unit averages $100-150 per month.
  • A warehouse costs thousands to manage and maintain monthly.

 

Then there is the wear and tear on an item.  Fabrics get stained, woods get nicked, and items get broken.  There are cleaning and repair costs involved with inventory.  Over time an item must be retired and replaced with a new item.  The old one is sold or donated at pennies on the dollar.  Things even get stolen from time to time – and have to be replaced.  It’s all a cost of doing business.

 

Therefore, when you are paying rental for things, you are helping that business owner cover operating costs and maintenance costs on having those items as a convenience to you – the Seller or Realtor – so that your house or listing CAN look better than the un-Staged marketed competition.

 

You pay for the “WOW Factor” to help your house or listing SELL – and when it sells we can say 100% of the time – “THE INVESTMENT OF STAGING IS LESS THAN A PRICE REDUCTION”that you did NOT have to take because your house SOLD.

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Category: Accredited Staging Professional ® Course, ASP Home Staging Training, Business Planning, Home Staging Articles, Home Staging Business Course, Home Staging Business Success, Home Staging Industry, Home Staging Training, Realtor Education, Stagedhomes.com

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