Staging 'twist' helps vacant homes sell
Monday September 22, 6:00 am ET
The basketball gods were smiling on Trenton Hassell when the Dallas Mavericks acquired the 6-foot-5-inch swingman from the Minnesota Timberwolves last September.
After all, Dallas still had Dirk Nowitzki and much of the nucleus that took them to the 2006 NBA Finals. Meanwhile, the eternally struggling T-Wolves had just dealt their lone superstar, Kevin Garnett, to the Boston Celtics.
"We had been out of the house since November," Tiffany recalls. "It was staged but it didn't do so well. When our contract with our Realtor ended, our new Realtor recommended Showhomes."
In early July, Showhomes, a home staging and residence management franchise with 35 locations nationwide, restaged the Hassell home with furniture and artwork from one of their resident manager couples, who promptly moved in.
The resident managers would not have time to get comfortable: The home sold the first day for $835,000, just shy of the $849,000 listing price.
"If I had known about Showhomes before, I would have done it a long time ago," Tiffany Hassell says.
How it works
The Hassells are typical of homeowners who have discovered they can save time and money by opening their home to a home manager for a lived-in look that really sells.
A 2004 Showhomes survey of 800 top-producing Realtors found that vacant homes spend an extra 30 says to 60 days on the market and sell for at least 10 percent less than occupied homes.
In the past, absentee homeowners like the Hassells had to pay for upkeep and utilities on an empty home. They also shelled out a monthly fee for a houseful of staged furniture that may or may not have helped the cause.
Now, couples like the Hassells are finding that moving in home managers with their own upscale furniture and artwork keeps the home in show condition, speeds the sale and fetches top dollar. The upfront staging fee is often quickly recouped by having the utilities paid by the home manager.
A few regional companies offer combination home staging and residence management services. They include Prestige Properties, Castle Keepers and Mansion Minders in the Dallas-Fort Worth metroplex; and Creative Show Homes and No Vacancy in Atlanta.
However, Showhomes is the only brand offering these services nationally.
Showhomes' origin in the 1986 oil bust in Oklahoma City and Dallas positioned it well, not only to compete effectively during the housing boom of the new millennium -- when staging was all the rage -- but to remain viable when the subprime bubble burst.
"We're poised this year for our fifth consecutive year of double-digit growth," says Thom Scott, director of operations for Showhomes.
"Even in the housing boom, we did really, really well. The buyer psychology behind selling vacant houses just works, regardless of the market. I'm the only one around the water cooler who is smiling about the real estate market these days."
How does home management work? With Showhomes, your property must list for $500,000 or more to qualify. Showhomes then charges an upfront staging fee of $1,000 to $3,000.
It usually takes five days to bring in the furniture and furnishings, which are normally owned by the home manager who will move in -- not as a tenant, but as a subcontractor to Showhomes.
Instead of rent, the manager pays a monthly fee to Showhomes and picks up all utilities. Showhomes pays for additional home insurance, as most homeowner policies will not cover a vacant house.
At closing, the seller pays Showhome a "success fee" of 0.25 percent to 1 percent of the listing price (as opposed to the sales price), with a half-percent being most common. Some franchise offices use a two-tiered fee structure: 0.75 percent if the home sells within 90 days, 0.25 percent thereafter.
"On a million-dollar home, we would typically charge a $2,500 setup fee and a $5,000 success fee if and when the home sold, paid at closing," says Scott. "If we didn't succeed in producing a sale, the homeowner would only pay the setup fee."
The home manager plays a pivotal role in the success of the home staging/ residence management model.
Scott is himself a home manager in Nashville, Tenn., where Showhomes is based.
He's currently managing his 12th house, which is listed at $1.7 million. He pays a monthly fee of between $1,500 to $1,800 plus utilities to live in the home and keep it in show-ready condition 24/7.
Scott says it's difficult to compare the monthly fee to what the home managers would be charged to rent a similar home.
"We don't often compare rental rates because the houses we do are not really rental properties," he says. "You don't see many $2 million houses for rent."
Home managers must have a touch of wanderlust. In many cases, they move back out of the house soon after settling in.
Carol Dicker, the relocation director for Prestige Properties and a home manager for 12 years, moved five times in the last year alone.
The mother of four boys has lived in everything from a $300,000, 3,500-square-foot home to a $1 million, 5,000-square-foot new construction.
Her longest stay? Three and a half years. Her shortest? Thirty days.
"Psychologically, when homes are vacant, buyers feel they have more bargaining power, but when someone is in the home, it takes that element away," she says. "I enjoy each experience. You don't get too sedentary and you certainly don't collect excess stuff. It keeps you kind of focused."
Scott says that in most cases, homes with resident managers sell -- fast.
"We beat market conditions by half, usually," Scott says. "Take Orange County, Calif. That's a really slow market these days, there's nothing moving, but we had 11 sales in the last 60 days of $1 million-plus houses in neighborhoods where nothing else is selling."
Showhomes did a case study in Chicago for the last quarter of 2007, tracking 28 homes it staged with home managers against 28 comparable homes the owners left vacant.
The result: Showhomes sold much quicker for 93 percent of the listing price, while the majority of vacant homes had not sold by the end of the quarter and their listing prices had dropped by 14 percent. Some of those homes are still on the market today.
Carm Panzarella, a real estate agent with John Greene Realtor in Naperville, Ill., took a chance and brought Showhomes in on a $600,000 listing that had withered on the vine for nearly a year. It sold within a month.
"It was fabulous," she says. "The home managers were an executive couple and they had the most gorgeous furniture. They allowed showings whenever they were scheduled. It got the job done."
Scott says the secret is focusing on the 45-minute threshold.
"That's the magic number," he says. "If you can get somebody to spend 45 minutes in the house, they're way more likely to buy the house. They need to be able to see themselves living there."
That's where mere staging often falls short.
"Staging these days with just furniture without a home manager is not producing the sales results it did in the boom," Scott says. "A lot of staging companies use rental furniture and everything looks really generic and it still looks like nobody lives there.
"One of the best compliments I can get from a Realtor is, 'Wow! I didn't know that home was staged!' We go to great lengths to make our houses not look staged. When you go to our houses, it looks like a really meticulous homeowner lives there. It's full of life, food in the fridge, clothes in the closets, maybe even color-coordinated. You walk in the closet and go wow, I want this life!"
Ironically, the subprime mortgage collapse has put Showhomes back where it started: fluffing up foreclosures.
"We are doing more and more foreclosure business these says; about 15 percent of our inventory is foreclosures and we expect that to rise, especially in Texas, Florida, Michigan and Riverside County, Calif., where there are tons of foreclosures," says Scott.
As for Trenton and Tiffany Hassell, they may soon be Showhomes clients again. Tiffany has already inquired with their Dallas Realtor about a Showhomes residential manager for their Texas home after the Mavs traded her husband to the New Jersey Nets in a mid-season, multi-player deal for Jason Kidd.