Commercial PropertyCompany Makes Business Out Of Staging Homes
With 35 franchises around the country, Showhomes of America serves sellers with homestaging and home management services designed to help vacant homes sell faster and for more money, and at no cost to the Realtor.
It"s basically a new form of short-term property management which many real estate agents could contract to do themselves with a little effort. But like all service companies, Showhomes answers a need for those who don"t want to go to the trouble - a turnkey solution. Vacant properties can cause homeowners to lose insurance or to pay costlier premiums. Realtors don"t know what condition the home will be in when they show it, and an attractively staged home is always more appealing to buyers than a vacant house.
Showhomes says it has the concept down to an art form - a franchise business model. The company began in the mid-80s when foreclosures and housing inventories were at record highs, and with the recent slowdown in formerly sizzling housing markets like San Diego and Las Vegas, the country could be headed for a housing recession again. If that"s the case, there will be plenty of vacant properties that could use a little oom-pah-pah.
Showhomes became a franchisor in 1994, and now has 35 franchisees across the country. Daniel P. Sarrett, regional director of Showhomes, explains how the Showhomes program works.
"Showhomes contracts with the homeowner of a vacant listed property, to begin the process of transforming the vacant house into a fully furnished model-looking home," he begins. "We do this by bringing in carefully selected and screened individuals we call Home Managers, who furnish and care for each vacant listing until it sells, typically five to 10 months.
"The Home Manager pays us a modest monthly fee while they occupy the home while it is on the market for sale, caring for the property as if it were their own," Sarrett continues. "The Home Manager also takes full responsibility for lawn and pool maintenance and pays normal utility costs.
"Once the home is sold," Sarrett says, "the Home Manager vacates the property and transfers to another vacant listing and the process starts over again. Everybody wins. The seller gets a beautifully staged model home (and keeps their insurance in place) the agent gets extra eyes and ears to give feedback from showings, and has the house taken care of, and the Home Managers get a great place to live for a modest monthly fee."
Sarrett says home managers are typically installed in $1,000,000 properties for about $1,100 per month, which is a great solution for many people who want to live in upscale homes and don"t mind a little nomadism as the price. Home managers are often "transferred executives, people between homes, and stranded sellers - those who closed on old home only to find out and their new house deal fell through or their new construction is not ready," suggests Sarrett. "Some are just staying in an area in beautiful homes until they decide what they want to do, and others are saving to buy their own homes."
"Mostly, they are all professionals, couples of all ages, and about one-third have small children," explains Sarrett. "Many are real estate agents, decorators, lawyers, and schoolteachers. We basically screen their furniture and then we screen the people. They must submit pictures to us or we may visit the home they are currently in. We give the pictures to our decorators and they make the final "Yes" or "No" if we have a good "match." After Home Managers move in under our supervision, our decorators add all of the accessories that take the properties over the top."
Obviously, the key to the success of homestaging is the integrity of the home manager, or temporary tenant. They must be neatniks - no smoking and no pets are allowed. They have to be ready to open the home to agents and buyers with 15 minutes notice.
"We make sure the Home Managers understand their responsibilities," insists Sarrett. "They sign a contract and a list of responsibilities they must do to stay in the program. Basically, they keep the home in "Show to Sell" condition from 11:00 a.m. till 8:00 p.m. every day and never refuse a showing. They also pay all utilities and operating costs for the property."
So how does Showhomes make money? If the homeowner doesn"t pay, and the Realtor doesn"t pay, who pays?
" It is the home owner who "hires" us to bring in an appropriate Home Manager with the appropriate furniture for their house," explains Sarrett. "Then our decorators go into the property and take it "over the top" with accessories and accent pieces.
"We get our primary revenue stream from the monthly fees the Home Managers pay us," he says. "They live in a $1,000,000 Showhome (assuming they qualify for perhaps $1000 or so per month.) They pay all the utilities and operating costs of the property and keep it in "show to sell" condition. The Homeowner continues to pay PITI. Again the I part of that equation - insurance - is huge. Without us the insurance policy might terminate and coverage expires "if within 60 consecutive days of a loss the property was vacant." Showhomes" presence keeps the homeowners insurance policy active and the property insured."
He adds, "The only time a home owner receives a charge, is if the property should sell within 60 days of our occupying and staging the house. We call that a "quick sale fee" and it is about $1,000 - that covers much of our initial property set-up costs. Other than that, there is no fee to the home owner or agent ..it"s free."
Homestaging is certainly a concept that has caught fire. "Recently the New York Times did an article," boasts Sarrett. "The Chicago Tribune Sunday Edition, (front page) and papers in Houston, Knoxville, to name a few, have covered us. CNN-fn did a 15-minute segment in their "Open House" weekly segment. We are kind of becoming the talk of the real estate business even though we have been in it a long time. I think we are catching the rage in "Staging " from all the cable shows etc. And, as the real estate market slows, the need to find more creative ways to make your property more competitively increases."
Today, Showhomes has over 35 national franchise locations.