Extreme staging: Selling a home in the Bay Area now means flipping it yourself

Vantage Realty agent Mary Macpherson is prepping a home in the Sunset for sale. A few years back, you could have “put a little lipstick on it” — staging, painting, landscaping — and called it a day. This time, her client is spending $200,000 to redo the kitchen and all bathrooms, creating a turnkey home for a buyer pool increasingly willing to pay top dollar to avoid the hassle and expense of a renovation.

“That ROI is absolutely there, and then some,” she said. 

The construction process means it’ll be at least six months before the home goes on the market, but Macpherson is confident the extreme makeover is the only way to ensure her client gets the most money possible at a critical point in her life.

“This is her retirement. She raised her kids in this house. Her husband has passed away. Every nickel means everything to her, so this is the absolute best course for her,” she said.

Any HGTV lover knows that there’s plenty of money to be made in flipping — renovating an out-of-date property in a great location to make a profit. But the possibility of tripling or even quadrupling their investment has made many Bay Area sellers into flippers of their own residences. In many cases, the brokerages that work with them have become no- and low-interest lenders so the sellers have the funds to finish the job. 

Agents estimate that sellers are expecting to pay north of $50,000 to prep their properties for the market — redoing floors, cabinets, and countertops, and updating appliances, to lure in buyers anxious about the cost and complications involved in a fixer-upper. 

“Buyers really want to have something that feels done,” said Ruth Krishnan, a Compass agent who said her team does “pretty big overhauls” on nearly every home it sells. “Doing that prep work to get it as close as possible to that vision is super, super important.”

Those who think home staging means decluttering and slapping on a fresh coat of paint clearly have not sold property in the Bay Area lately. More sellers are seeing an opportunity to make a killing on their homes if they put up the cash to zhuzh them up.

It’s gotten to the point where homes on the market without a facelift tend to stick out — in a bad way. 

In a city full of creaky, century-old homes, buyers are shelling out for move-in ready properties — while repeat flipper agents cash in on contractor discounts. Add in soaring construction costs, and paying a premium starts to look easier to buyers than swinging a hammer.

Sellers can take advantage of relatively minor improvements that look like a million bucks. For example, Krishnan said, buyers may imagine it costs $100,000 to renovate a kitchen or $50,000 to redo flooring, but she can often make it look new for a fraction of that cost. 

“In [the buyer’s] mind, it saves them $100,000, even if the seller only spent $20,000,” she said.

Arrian Binnings of Christie’s International began his career as a home appraiser, said San Francisco’s antique housing stock means the price per square foot can vary greatly even within one neighborhood.

When sellers look at the data, they are “blown away by the range,” he said. For example, a 3,000-square-foot home in Pacific Heights sold for $3.5 million, while one a few blocks away was priced at $8 million. 

“If I ran that same analysis in some cookie-cutter subdivision outside of Phoenix, where every single house looks the same and the only difference between House A and House B is one house has Whirlpool and one has Kenmore, it doesn’t matter what the houses look like,” he said. “They’re all going to trade for plus or minus 3%.” 

He’s had sellers who are aghast at the inconvenience of having to move for a few months while their homes are under construction. But when he explains that they’re probably leaving 7% — hundreds of thousands of dollars — on the table by not clearing out, they quickly change course.

“A lot of people then come back the next day, and they’re like, ‘You know what, we decided we're going to get an Airbnb’ or ‘We decided we’re going to move up to my parents’ wine country house until this process is over.’” 

Though it can be a delicate process to navigate, it’s part of the job for agents to gently suggest improvements, often by letting “before” and “after” photos of other clients’ homes do the talking.

Compass agent Kevin Wakelin shows clients a glow-up in four steps: lived-in, stripped down, renovated, and fully staged.

“You see them go, ‘Oh, wow, now I see the difference,’” he said.

Plus, as pre-sale renovations become table stakes, there’s the implication that an unpolished home will suffer by comparison.

“You’re a $2 million house, and you’re not painted, you’re not cleaned up, you’re not staged, and every other $2 million house is painted, staged, gorgeous. What is the buyer going to feel?” Wakelin said. “They’re going to walk in and say, ‘This doesn’t feel like a $2 million house.’” 

Sellers who fail to renovate run the risk of missing out on a top offer. But even worse, they raise the likelihood of their home languishing on the market as the dreaded days pile up. With a whiff of vulnerability, the vultures start circling, and the price drops precipitously, Wakelin said.

However, even if buyers are convinced of the benefits of doing improvements, they may not be able to afford them, especially if their money is already tied up in their next residence. 

The problem’s so common that brokerages and partners now offer low- or no-interest loans to cover presale renovations.

Nearly all of Wakelin’s renovation clients use Compass’ Concierge no-interest loan program. Borrowers are liable for a small fee that isn’t due until the home sells, has been on the market for a year, or the client ends the listing agreement. When the money is repaid, it goes back into the pool to fund other renovation projects.

The funds can be used for kitchen and bathroom improvements, roof repairs, painting, HVAC work, deep cleaning, landscaping, moving, storage, and even the home inspection report. 

Vantage Realty has a similar product through its affiliation with white-label brokerage Side which is often used by Macpherson’s clients. Then there are third-party services like Curbio, a general contractor specifically for presale renovations with access to financing options that allow sellers to pay for their updates after they close the deal. Other models include Renofi, which has loan products that allow sellers to borrow against their home’s higher post-renovation value to fund the overhaul.

Even without these programs, Binnings said, sellers will figure out where to get the money; it may mean borrowing from friends and family. Frankly, they have to put their chips in, because the potential winnings are just too good to pass up. 

“Name another investment where in three months time you can [quadruple] your money,” he said, short of “some crypto altcoin.” 

“This is becoming more and more in the zeitgeist,” he added. “People are understanding the math behind it and being like, ‘You know what? This is actually a huge opportunity.’”