Transforming residential real estate marketing with AI virtual staging

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Residential real estate marketing is undergoing a digital transformation. The core reason for this change is the introduction of virtual furniture staging powered by artificial intelligence (AI) instead of by humans using Photoshop. Let’s explore how AI virtual staging is in the process of revolutionizing residential real estate marketing and how we should expect it to influence the future.


Physical to virtual staging: The transition


To understand how residential real estate marketing is changing, we need to explore the transition from physical staging to virtual staging over the last decade.

At first, property marketing relied heavily on physical staging, where properties were furnished for in-person viewings and photography. This was the first time that clients were able to envision what it would be like to live in the property. 85 per cent of the staged homes in a study run by the Real Estate Staging Association sold for between 5 and 20 per cent more than the original asking price, indicating that staging provides a significant return on investment.

According to the Canadian Real Estate Association, the average sale price of a house in Canada in December 2023 was $657,145. This means that a staged home would sell for about $33,000 to $131,000 more than an unstaged home. In addition, another Real Estate Staging Association study found that home staging decreased a property’s time on the market by 72 per cent, again proving that staging a home works. 

However, over the last few years, virtual staging has gained in popularity, especially following the global pandemic when clients were unable to view properties in person. Unlike physical staging, virtual staging primarily involves a human graphic designer using software like Adobe Photoshop to enhance empty photographs of rooms with furniture. With the rise of AI technology, this process is undergoing a major change.


Reduced costs, increased speed


AI virtual staging has led to both a significant reduction in costs and an increase in speed compared to traditional virtual staging. These positive changes are primarily because the virtual staging work is automatically generated by AI instead of being developed manually by a human. 

The cost of a machine is a fraction of what human labour costs. This is why the real estate industry is developing towards a future where most online property images will likely be AI-staged and empty property images will be a thing of the past.


Different staging by property value


From my interviews with real estate agents and real estate photographers, it’s clear that the type of staging is highly correlated with the property’s value. While nearly 90 per cent of the agents I spoke with use some form of staging, those with properties above $1 million usually require physical staging. At this price point, a $5,000 investment in staging that raises the sale price by 5 per cent is a great return on investment.

On the other hand, I found that agents with properties in the $400,000 to $1 million range usually opt for traditional virtual staging. At this price point, a $250 investment in staging that raises the sale price by 5 per cent is also a great return on investment. Historically, properties below $400,000 were not staged, despite evidence suggesting that even simple staging can significantly impact the property’s value.

So, even though online images of properties above $1 million will still likely have real furniture, expect that online images of properties under $1 million will soon only be staged with AI-generated furniture.


Impact on asset and property managers


From my interviews with asset managers and property managers, they are similarly impacted by these forces. Historically, large, high-end multi-family apartment buildings have used a physically staged model unit. Less expensive properties that can’t afford a model unit haven’t had an affordable solution for staging. Managers of these properties sometimes just leave images unstaged or reuse the same virtually staged images across different floor plans. 

Unfortunately, cap rate compression is expected in 2024, so asset managers are now strongly incentivized to force their property managers to find technology solutions to find renters.


What the future holds


The future of AI image editing innovations in residential real estate marketing will further push what machines are capable of, but there is much that will still require a human. First, it’s impossible to virtually stage without the original image, so real estate photographers must continue taking photos of properties. Second, for now, virtual staging jobs that require the best quality will still require a human.

How clients interact with these images will also change. Real estate platforms will change how a property is virtually staged depending on the client’s preferences. These platforms will also allow renters and buyers to virtually stage images themselves with a customizable furniture library, rather than relying on agents and property managers.

The introduction of AI virtual staging into residential real estate marketing is a major trend that will continue to accelerate. Online property images will predominantly be staged using AI, aiding more prospective buyers and renters in discovering their ideal property.


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