Like it or not, when you stick that for-sale sign in the front yard, your home becomes … well, merchandise — something for someone to buy.

And just as a successful retailer works to display his merchandise in a way that makes you want to buy it, a good real estate stager tries to figure out how to make someone want to buy your home. He or she may rearrange or add furnishings — or subtract them — and suggest changes to the house that are intended to play up its best features.

A field that was in its infancy a decade ago, staging these days is a routine part of the real estate transaction in many communities. But in this relatively unregulated profession, just about anybody can claim to be a stager, and members of the profession can come from widely varied backgrounds and professional training. What you get for your money can vary, too.

Five things you ought to know about hiring a real estate stager:

1. There’s no clear-cut career path to becoming a stager, according to Shell Brodnax, president and CEO of the Real Estate Staging Association in Valley Springs, Calif., which claims to have about 1,000 members.

It’s a field unto itself, she says.

“They are professional home stagers, which doesn’t preclude them from also being designers, decorators, real estate agents, etc.,” she said. “They have a wide variety of backgrounds. The ones who seem to do exceptionally well have backgrounds in merchandising,” or the visual display of products for sale.

Brodnax said the services they provide will vary, based on what a given house needs to make it show best to prospective buyers. Sometimes, that’s as basic as rearranging the furnishings for better “flow” or to emphasize a house’s best points. But usually their efforts are more extensive, and they may, with the owner’s permission, remove excess furnishings or bring in rental furniture or work with building tradesmen on changes to paint, finishes, etc.

“They’re going to counsel you on everything you need to do to properly prepare that property for sale,” Brodnax said. “If the house is super-dated, they’re going to check whatever else is on the market to see what the competition is. If every other home has updated kitchens, baths, carpet or whatever it may be, they’re going to tell you, ‘This is what you’re up against — so you would want to change those avocado green countertops or that dark-blue wall.’

“They’re going to make all these recommendations, and it’s up to the client to choose what to invest in that the stager has recommended,” she said.

2. Most, but not all, stagers have had some kind of professional training specific to staging, Brodnax said.

“There are two basic types of courses you can take: online and in-person,” she said. “There are a few five-day programs, but most (classroom) programs are three days.” The online courses, she said, are paced at the student’s discretion.

Much of the instruction in these classes, she said, will be weighted toward teaching stagers how to run a successful business, and although classroom sessions usually include some hands-on instruction about maximizing a home’s visual appeal in terms of saleability, it’s not usually the principal focus of the courses.

Having the visual skills, she said, is something of a given for those who take the stagers’ courses. “The majority of people who are going to take a class have already been doing this — they’re constantly rearranging the furniture at home,” Brodnax said.
3. Although some stagers will work on a per-hour basis, most charge by the job, and the costs tend to vary by region, Brodnax said.

“Most will offer a free look-see, where they’ll come out and give you a bid,” she said. “They will say they will stage it for X dollars, and it will cost X (additionally) for rental furniture, and those numbers are going to vary widely.

“It can be as low as $500 (for the staging services), depending on where you’re located. It’s not unheard of for big mansions to pay $20,000 to $40,000 for staging.

“The average, though, probably comes in between $1,500 and $3,000.”

Brodnax said that occasionally real estate agents will foot the costs of staging for clients, though it’s not the norm. At the height of the housing boom, though, it wasn’t unusual to have agents pick up the costs in order to get a listing, because their commissions would offset those costs.

“An agent may now pay for a consultation with a stager, maybe $150 to $300,” but these days it’s the norm for the homeowner to pay for the staging, she said.

4. The average foreclosure buyer is unlikely to encounter homes that have been staged, Brodnax said, even though long-vacant, foreclosed homes may seem to be a natural project for stagers to tackle.

“The problem is, banks are unwilling to pay (for staging),” she said. “The banks usually will give a small stipend to fix it up, usually less than $500.

“Sometimes, though, it might take $300 just to get somebody to pull the garbage out of the house” that has been left behind by the foreclosed owner, she said. Little, then, is left for staging.

However, when some banks are willing to finance it, stagers might be brought in to arrange room “vignettes,” such as a breakfast room or family room setting, to help buyers imagine what it might be like to live in the house, she said.

5. Homeowners seeking to hire a stager might get referrals from their real estate agents, Brodnax said; she suggests, however, that consumers interview at least three stagers to get a broader picture of which kind of merchandising is appropriate for their homes.

She said stagers should be able to provide photography of their work in a variety of styles, in order to demonstrate that they can stage a house appropriately for its architectural style, not just according to the stager’s own tastes. Stagers should be able to show they’re insured, she said. As with any other professional, the stager should be able to provide references, she said.

Brodnax’s group has a downloadable “Consumers Guide to Real Estate Staging” at its site, www.realestatestagingassociation.com. Other staging groups that provide geographical listings of their members include the International Association of Home Staging Professionals (IAHSP.com) and the American Society of Home Stagers and Redesigners (ASHSR.com).

To avoid a bad experience that could end up in a legal battle with the sellers over property problems, make sure your purchase agreement includes an inspection contingency.

Your mission during the inspection contingency period is to find out as much as possible about the property and surrounding area, insurability of the property, permit history, zoning issues and cost to repair defects. Investigate any issues that could affect whether or not the property will suit your long-term needs at a price you can afford.

Most states have home seller disclosure requirements. If you are buying in a state that doesn’t require sellers to disclosure material facts, ask the sellers to disclose in writing any property defects or neighborhood issues they know about.

Also, find out if there are systems that require routine maintenance, such as the furnace, drainage system, skylights and roof. After you clear the inspection hurdle, ask the seller to provide you with contact information for any people who have worked on the property that the sellers would recommend.

Find out when major components were replaced and when the house was last painted. Find out how much the sellers pay for utilities. Ask for copies of proposals and paid invoices for any significant work done on the property.

Basically, you want to know any problems the seller had with the property, what was done about it, by whom and when. If the roof was recently replaced, find out if it’s covered by a warranty and if it’s transferable to you.

You may feel uncomfortable asking the sellers to provide additional information at the time you make the offer, particularly if there are multiple offers. In this case, ask the sellers for answers to your questions during the inspection contingency time frame. Questions will undoubtedly come up during your inspections.

HOUSE HUNTING TIP: Even if the sellers have provided presale inspection reports and disclosures, have your own inspectors give the property a thorough exam. Some buyers hire the seller’s home inspector to meet them at the property to explain the presale report and ask questions. This may save you money. But, saving money should not be the primary goal when having a property inspected.
Buyers of newly built homes should ask the sellers for any construction-related documents like the geotechnical report, engineering calculations, and letters to the planning department confirming that the geotechnical engineer monitored the construction and confirmed that the house was built according to his recommendations. Ask the seller to leave the architectural plans, if they’re available.

Verifying livable square footage is a big issue in today’s cautious mortgage environment. Many lenders won’t count additions or renovations that add square footage in the appraised valuation of the property.

If the sellers can’t provide the supporting documentation, such as copies of approved permits, the property could appraise for less than you agreed to pay. This might jeopardize the transaction if the lender approved a lower mortgage amount than you requested.

It’s a good idea to check the permit history at the planning department yourself if the sellers can’t provide copies of permits for work done. This should let you know if renovations were done with permits and if the permits received final approval. You should have this information before removing the inspection contingency.

Many planning departments won’t issue a new permit if there is a permit on record that never received final approval. The new owners might incur fees to clear up any outstanding permits before they can move forward with new improvements.

THE CLOSING: With probate and REOs (bank-owned properties) you will receive minimal, if any, information about the property condition. Be extra careful with your due diligence investigations.

Many lenders haven’t yet fully implemented technology to comply with new rules that took effect this year under the Real Estate Settlement Procedures Act (RESPA), and most are taking longer to provide disclosures when borrowers submit loan applications, according to a survey by Equifax.

The Equifax survey of 105 lenders who use its employment and income verification service found 79 percent are taking longer to take an application and provide disclosures to borrowers since the RESPA rule change went into effect Jan. 1. About 72 percent of lenders said borrowers were confused about the multiple disclosure documents they receive.

Only 56 percent of respondents have completely implemented the technology necessary to comply with the new regulations, Equifax said in a press release.

Lenders and settlement service providers are now required to use a new standardized good faith estimate (GFE) and HUD-1 settlement statement form that are intended to help consumers comparison shop and restrict changes to quoted fees and settlement services.

The Equifax survey found lenders are incurring costs when fees quoted on the GFE increase by more than the allowed tolerances. Errors on disclosure forms are postponing closings because of the mandatory three-day waiting period if fees must be redisclosed, the survey found.

Most lenders (74 percent) said that they were not experiencing a backlog of applications, but mostly because loan applications have dropped with a slowdown in the refinancing boom.

The new RESPA rules were issued in November 2008, but during a transition period in effect during 2009, use of the new GFE, HUD-1 was optional, as were most provisions of the new rules.

But real estate industry groups complained that it was unclear how the rule changes would be applied in practice, citing a steady stream of revisions regulators have made to a RESPA “FAQ” — answers to “frequently asked questions” — first posted in August.

Lenders were given 14 months to prepare for the rule changes that went into effect on Jan. 1, the Department of Housing and Urban Development (HUD) said in rejecting calls for an extended transition period (see story).

But HUD promised to “exercise restraint” in enforcing the new regulations for the first four months of 2010, as long as lenders can show they are making a “good faith effort” to comply.

The latest update of HUD’s RESPA FAQ addresses issues that include loan preapprovals and internal worksheets that lenders have been providing to borrowers before issuing or in conjunction with a GFE. The April 2 update brought the FAQ document to 62 pages.

“To HUD’s credit, these updated FAQs suggest that the department is considering many of the practical problems that have resulted from the forms and takes to heart the issues raised by settlement service providers,” said K & L Gates LLP attorneys Phillip Schulman and Holly Spencer Bunting in an alert to clients.

“However, that means that HUD has changed its interpretation of certain requirements and issued new FAQs, which are sure to raise additional questions.”

Although preapprovals and worksheets are not governed by RESPA, the K & L Gates attorneys said, HUD is instructing lenders on both issues. If consumers have already chosen a specific property, lenders must issue a GFE, HUD officials said in the updated FAQ.

“A preapproval is never to be used as a substitute for a GFE,” the FAQ said. “If an applicant has chosen a property to purchase and the loan originator is willing to qualify the applicant for a specific loan amount, then a loan originator should issue the applicant a GFE that facilitates shopping for a loan, not just a preapproval used to shop for a property.”

Because HUD’s standardized GFE form does not include some information that consumers may find useful — including the cash needed to close, and credits from the seller or other parties — some lenders have developed internal worksheets to provide those details to borrowers.

That’s an acceptable practice, HUD ruled in the FAQ update, but a worksheet cannot be used in lieu of the GFE, and “should not look like a GFE and should not lead the customer to believe that it is a GFE.”

If lenders have received an application from a potential borrower — or information sufficient to complete an application — they must issue a GFE, HUD said.

HUD’s updated RESPA FAQ still addresses only in passing a potentially contentious issue for real estate brokerages — the reporting of percentage-based and flat-fee commissions on the HUD-1.

Real estate brokerages that collect flat fees — sometimes labeled “administrative brokerage commissions” (ABC fees — or “junk fees” by critics) — may face legal claims by consumers under RESPA if they are not reported correctly.

Because the new RESPA rule was not explicit in stating that real estate brokerages are permitted to charge flat fees along with percentage-based commissions, Jay Varon, an attorney who represents real estate brokerages, sought clarification from HUD last year on the proper way to disclose such fees.

HUD’s top lawyer issued a letter in January detailing the proper procedures, but warned that her advice did not “constitute a rule, regulation, or interpretation” of law, and that “no person may rely on it to provide protection from liability under RESPA.