Welcome David... I think you'll come in handy for a lot of the South Florida questions as well - especially if you follow Ines and Rick Garcia's posts about Permits!
I'm a mortgage broker and just finished a huge construction loan last month. It was the most complicated one I've ever done... I might have to email you with questions when I get another that complicated!
Hello David,
I to am new to the Rain. I am a stager and I was contacted by a home builder about doing his model homes. His frustration was spending $200,00+ to merchandise his models only to have to get rid of a house fill of furniture after the phase closes out. So he wanted me to put my furniture in the model and just rent it from me.
So I thought if he has this dilemma so must other builders. So I saw a nitch that I could go after but I have some question you might be able to answer for me.
What else do home builders dislike about merchandising the models besides having to deal with the furniture at close out? I would like to put to gether a proposal package that would appeal to all home builders. How long does a typical phase last? I was told 3 to 5 years. Is money for staging and rental a factor? I was told the cost of mechandising is calculated into the price of the model? Is finding and paying for an Interior Designer a factor?
Any information you could give me that would help with this project would be greatly appreciated. I have done model homes before but only when the builder gave me a budget and he was keeping the furnishings.
Thanks again for your help!
Penny,
The answer to this builders concerns is simple. It will cost more money to rent furniture. They will be paying a premium for convenience at the end of the furniture's use, but, if money is the concern, they will always spend more to rent.
The real issue here is how much more money builders make because of model merchandising. There is no question that the houses will sell for more money and in a faster amount of time. I think you should turn the tide of this conversation towards the rewards that are gained from utilizing a designer!
A garage sale at the end of 3-5 years is really no big deal! So much money will be made over that period because of the furnishings and saved money for not having rented the furniture.
Maybe this builder sees this as a way to stretch out the expense of model merchandising, but, do you want to be attached to the project for 3-5 years? Do you want your projected earnings to be tied to rental income? I think rental is for short term, I would make the point clear..."this is a much more expensive approach" then if they go for it, well, you should make great profit!
Welcome David and I think you'll find lots of great information here at AR! Now on to my thoughts..
I have to say I'm a little confused with your comment back to Penny. I too am a stager and finding the opposite is happening. Many builders here (especially smaller ones) don't want to pay for merchandising their models & specs and as well as the fee of an interior designer. These homes are sitting empty and not selling. Each month these sit is costing them thousands of dollars in lost revenue. Staging with rental furniture is actually cheaper in most cases. We provide many options for the builders and aren't trying to upsell anything. Staging features the house, not the furnishings and a lot of buyers get overwhelmed by the amount of accessories in the models sometimes making the decision not to buy based on the fact that they can't afford to furnish it in the way the see the model. Staging is the FRAME on the picture - the HOUSE -.
Now a 3 -5 year contract that may prove to be more expensive over the life of the model but in cases of less than a 1 year lease agreement, it really is more cost effective. I'd be interested in what others have to say on this subject as well.
Hi Karen! Well- I guess the most important aspect of this conversation would be the estimated time needed to sell. I am sure that calculations can provide a break even point even though you are speculating as to how long the product will stay furnished. Interesting, but no doubt in my mind if the estimation calls for saving money renting the furniture that would be the way to go.
For me, if I can see the proposal with both options I would just make my choice. The numbers fall where they fall...it becomes a matter of choice if presented well. I think it would be a good idea to take the "wonder" out of the equation by exposing all viable options.
I think demographic research is very important in these decisions so you don't "scare" prospects.
Thanks for your comments, I too would like to hear what others think.
David
This is like hitting the jackpot! Welcome David - you may end up feeling like the electrician brother-in-law by the time we get through with you...nah, just pulling your leg.
To shed some light on model home furnishings, most builders have more projects than one and they plan on many more developments in the future. I am wondering if that builder is a one time wonder.
Builders either warehouse their model home furnishings, sell them off as already pointed out, or in my experience, the models are sold turn-key for a premium price and all the money is recouped and the home buyer gets the luxury of having a fully furnished home decorated to the nines. I have seen auctions take place early on for the models.
Welcome, David!
I agree with Sheron... I am with a builder and am actually sitting in our model home right now typing this. When we are ready to sell the model, we will offer the home fully furnished. It just wouldn't make sense to do it any other way! We will get 4-5 years of use out of the furnishings, and the typical model home buyer would prefer not to have to deal with hiring a decorator or having to furnish it themselves. We probably wouldn't consider storing the furniture. First off, it was purchased for this home, matching the window treatments and fitting the floorplan. Second, a model home should preferrably show with updated furnishings. This is a cost that the builder should account for when building a model. I also agree with what you and Karen were talking about, time frame... This would determine the solution. Like you say, it would possibly be more cost effective to rent if this is a short time... But for a model home standing and showing for more than 2 years, I believe the builder will get his return tenfold by purchasing! Thanks for the interesting blog! I look forward to more...
Jennifer Sealey
United Home Builders, Inc
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