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Updated: Tuesday, May 17, 2022

An Insider’s Look at the Reality of Home Staging

When it comes to home staging, there are typically two buyer camps: The first thinks its a waste of money and doesnt want to pay more to potentially make their home more attractive to buyerseven if their real estate agent says theyll make it up and then some; The second realizes the value and is willing to make that smart investment.

But just how do those two contingents break down? The National Association of Realtors NAR 2019 Profile of Home Staging provides some insight. The study separated the study into three categories: Buyers Agent Perspective, Sellers Agent Perspective, and Buyer Expectations. Were taking a closer look at the key points.

Home Staging: Buyers Agent Perspective

According to the study, 40 percent of buyers agents cited that home staging had an effect on most buyers view of the home and 83 percent of buyers agents said staging a home made it easier for a buyer to visualize the property as a future home. Buyers agents also noted that, Staging the living room was found to be most important for buyers 47 percent, followed by staging the master bedroom 42 percent, and staging the kitchen 35 percent.

Home Staging: Sellers Agent Perspective

Per the study, 28 percent of sellers agents said they staged all sellers homes prior to listing them for sale, and 13 percent noted that they only staged homes that are difficult to sell. The living room 93 percent, kitchen 84 percent, master bedroom 78 percent, and the dining room 72 percent were the most commonly staged rooms.

Sellers agents offered to do the staging 26 percent of the time, and, The median dollar value spent on home staging was 400.

Buyer Expectations

Call it the HGTV effect: A median of 10 percent of respondents cited that buyers felt homes should look the way they were staged on TV shows, while 38 percent of respondents said that TV shows which displayed the buying process impacted their business.

The real effect of staging

Now that we have the buyers agent, sellers agent, and buyers perspective, lets look at some real data about staged homes. According to the NAR study, 22 percent of sellers agents reported an increase of one percent to five percent of the dollar value offered by buyers, in comparison to similar homes, and 17 percent of respondents stated that staging a home increased the dollar value of the home between six and 10 percent. 28 percent of sellers agents stated that there were slight decreases in the time on the market when the home is staged, while 25 percent reported that staging a home greatly decreased the amount of time the home was on the market.

Of course, time on market and sales prices can range depending on a number of factors, like age of home, location, square footage, and price point. The Real Estate Staging Association has found, overall, that staged homes sell 73 faster, on average, than their non-staged counterparts, said The Mortgage Reports.

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Is a Bigger Down Payment Always Better?

When youre buying something major with a loan, namely a house, you likely need a down payment. A down payment covers part of the purchase price.

Your down payment plays a role in whether you are approved for a mortgage at all. Down payments also impact your interest rate and the borrowing costs throughout the life of your loan.

Your down payment usually comes from your savings. The down payment should be a percentage of the total purchase price, and then you pay off the rest of the loan by making installment payments.

If youre buying a house for 200,000 and want to make a 20 down payment, its 40,000. You would pay that when you close on your home loan. Then, youre actually only borrowing 160,000.

There are arguments to be made both for and against making the biggest down payment possible. There are also pros and cons of a larger down payment.

The Pros of a Bigger Down Payment

If you save the cash and want to make a bigger down payment, one big benefit is reducing how much youre borrowing. When you have a smaller loan, youre going to pay less in total interest over the life of your loan.

Youll also get lower payments each month.

You can use a loan calculator to see how much a larger down payment has the potential to affect your payments.

With a bigger down payment, you may qualify for lower interest rates. A lender likes a bigger down payment because theyre taking less risk on you. If you default on your loan, they see that theyll be able to get more of their money back.

If you can manage to make a down payment of at least 20, you can avoid paying private mortgage insurance.

Since down payments that are larger mean a smaller monthly payment, youll have less stress in this area.

There are opportunities to borrow against assets such as your home. The home is an asset that serves as collateral. The larger your down payment is, the sooner you build equity in your home. Then, you can borrow against that equity.

Why Would You Make a Smaller Down Payment?

While theres a significant upside to maxing out how much you put down on a home, its not always the right situation. We tend to see a bigger down payment as always being better. In reality, it depends.

One reason to go with a smaller down payment is that it can take a long time to save that much cash. You may not want to wait so long to buy a house.

Even if you do save enough money for a large down payment, it can create stress to think about putting the money into a house. If you were to face an unexpected situation and had less of an emergency reserve, it could create problems.

Another reason a lower down payment could make sense for you is if you want to make any repairs or potential upgrades to the home after you buy it.

Most lenders will set a minimum down payment required, and you can always pay more than that.

Down payments will show a lender youre serious and that youre putting yourself on the line as far as taking a risk but think about your personal financial situation before

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Comparing a Pre-Approval and Pre-Underwriting

When youre shopping for a new home, there are a lot of steps in what can be an overwhelming and frustrating process.

Much of that frustration comes from getting mortgage financing.

Before you start to look for a home, you might decide to get pre-qualified or pre-approved. Theres also the option to go through pre-underwriting. When the housing market remains competitive and bidding wars are common, there are some benefits to pre-underwriting, which we detail below.

What is Pre-Qualification?

Pre-qualifying for a loan is a single step on your way to a pre-approval. Pre-qualifying is part of a process when you work with a lender, and they decide the type of guarantee they will give you.

Then, once you get pre-qualified, you would move on to get pre-approved or pre-underwritten.

You dont have to pre-qualify to do either of the next possible steps, but some people like to do it as their first step because they learn more about what they can afford.

Its a soft pull when you do a pre-qualification before your pre-approval. The pre-qualification wont hurt your credit score, which is important for your interest rate and whether youre approved at all.

A lender needs a few basic things for a pre-qualificationyour monthly income, estimated monthly debts, and the down payment you can make.

The figure a lender gives you as a pre-qualification amount is estimated and based on assumptions of your financial situation. The number indicates a figure that a lender might be willing to give you, but its not definite.

Youll probably need an actual pre-approval letter to start working with a real estate agent.

Getting a Pre-Approval

While a pre-qualification is a figure the lender would likely lend you, a pre-approval has the terms detailed for their theoretical offer. The details in a pre-approval will include your allowable purchase price, interest rate, and lending fees.

It would be best if you went into the process to shop for a mortgage with a pre-approval in hand. This is what a real estate agent wants to see to work with you to ensure youre not wasting anyones time.

The pre-approval letter is a tentative amount of money that a lender says they would loan to you.

A pre-approval will require a hard pull.

Your lender will probably ask for quite a bit when doing a loan pre-approval. Theyll want to see all your financial information, including your tax returns and bank statements for at least the past 60 days. Theyll want retirement and brokerage statements for the past 60 days, totals for your monthly debt payments, and documents >

Then, Theres Underwriting

Underwriting is the last step to actually getting financing to buy a home. After submitting everything to get approved for a loan, your loan goes through underwriting. This is a time when the lender will closely assess all of your finances to determine their risk level in extending you a mortgage.

This is where youll probably run into most of the delays.

Pre-underwriting is when you can go through this step before youre under contract for a house. An underwriter can do everything on their end that would otherwise come after your offer is accepted before you start looking at properties.

With pre-underwriting, sellers know youre someone they can have confidence in. Youre showing them there are limited opportunities for surprises or things to go wrong.

In a competitive market, pre-underwriting can be a tool that makes you a very strong candidate, and it can help you win a bidding war, even more so than offering more money.

Pre-underwriting is a somewhat new option, so your lender may not offer it, but if so, it can take some of the stress off of you and make it more likely you will get the home of your dreams.

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