Posts Tagged ‘bank owned homes’
Temporary Tenants Give Luxury Homes A Lived-In Look
Alan Shuminer lives on two acres of land in a house with a current list price of $3.3 million in Miami â and he only pays $2,600 a month. He is a home manager for Showhomes, a home staging company.
Bernie Schupbach needed to sell his home in the height of the real estate crash.
His home in Yorkville, Ill., was unoccupied. It had lingered on the market for a long time — and Schupbach, a radiologist in Aurora, Ill., was growing uncomfortable.
“To me, you worry about a pipe breaking in winter. You worry about the heat going out. You worry about vandals. You worry about animal infestation,” he says. “My big concern was: There’s nobody there, I’m 30 miles away.”
Then somebody mentioned Showhomes to Schupbach and his wife, Lynn.
Showhomes is a home-staging company that helps people sells their homes. Its employees make minor suggestions like changing a paint color or fixing up a front door, but also de-clutter and depersonalize a home.
And nothing depersonalizes a home more than having another person, couple or family living in it — meet Showhomes’ unique Home Managers program.
Home managers are actively recruited — and vetted — by the staging company, through avenues like real estate agents and Craigslist. Showhomes gets paid by both the homeowner and the home manager.
The home manager pays a fee that’s one-third to half of what traditional rent in a specific market might be plus utilities, says Matt Kelton, chief operating officer of Showhomes.
The average fee paid by a home manager to live in a Showhomes property is $1,350 per month.
Home managers go through a specific training program. They need to keep the house immaculate, disappear when potential buyers come for a showing, and, once the house is sold — never come back again.
Oh, and there’s another catch: Whoever moves in needs to have enough furniture to fill the home, which is often a luxury property.
Kelton says that on average, home managers have a five-day “no peek rule,” when designers take their furniture and redesign the house. He says homeowners often see their newly redecorated house and say, “Man, I wish I wasn’t moving.”
Kelton says the Home Manager program helps sell houses by making them look lived-in. An empty house, he says, gives off the perception that a homeowner is desperate to sell.
“To sell a vacant house, you’re going to see a home that takes longer to sell. It’s going to show the flaws of the homes right away,” he says. “Something about having food in the pantry … it’s hard to put my finger on it, but there’s some kind of emotional connection that happens.”
Showhomes was founded in 1986 and now serves communities in 18 states. The company, with nearly 60 franchise offices across the U.S., was founded during the savings and loan crisis and oil bust of 1982 in Oklahoma, when interest rates were set at 17 or 18 percent and banks had huge amounts of foreclosed homes.
The company started to take homes that were sitting vacant and match them with people who were being relocated.
Many home managers are people in transition, like executives who have been relocated, or someone waiting for their new home to be built.
Alan Shuminer has been a home manager in Miami for about five years. When he first got involved in the program, he had just gone through a divorce and was looking for a place close to his three children.
Shuminer says he’s an atypical home manager because he’s in the program for the long haul. He estimates he’s moved 10 or 12 times. Luckily for him, if a home manager is moving to another in-town Showhome, a franchisee pays for the move.
And it works perfectly for Shuminer. “I’ve done the house ownership bit,” he says. “My lifestyle right now doesn’t require me to be home very much.”
Nationally, properties staged by Showhomes list for an average $750,000, but range from $200,000 to $12 million.
Shuminer, a lawyer, says he hasn’t lived in a house that’s less than $1.41 million. He currently pays $2,600 per month for a 7,500-square-foot house — with a pool — that’s listed at $3.3 million. (According to Kelton, the average home manager fee is $1,350 per month.)
Generally, Showhomes focuses on properties that among the most expensive in an area, Kelton says. Nationally, its average list price is around $750,000, but prices range from $200,000 to $12 million.
And Shuminer’s favorite part of the program? “Going to a new house,” he says.
He says he gets bored and too acclimated after a while; he reaches the point where he’s ready to move. And it’s easy for him, because after so many moves, he says he has a lot less stuff than he used to.
“I think some people see it as being unstable,” Shuminer says. “The fact that I move around is just one of the idiosyncratic quirks about me.”
Kelton says being a home manager means a very different kind of lifestyle. He said he’s had managers in the Showhomes system for anywhere from 30 days to 10 years.
As for Schupbach, the radiologist, he guesses home managers lived in his house in Illinois for about two years. “I had somebody in the house. I knew that if something went wrong, they would tell me,” he says.
One company’s secret to home staging? The human element.
When selling a home, the smallest details can make the biggest difference.
A home staging company has been using actual (real-life!) people to help boost property sales, according to the Tampa Bay Times. Sure, it’s good to make a vacant house look comfortable, clean and inviting, the theory goes; but imagine if a company could do all that — and bring in a bonus fake homeowner, whose closet-organization skills and general vibe make the whole place seem more livable, too.
“There is an energy in that home,” Showhomes franchise owner Linda Saavedra told The Post in a phone interview Monday. “The temperature and the smells are all completely different. It really feels like home.”
Confused? Here’s how it works: So-called home managers get to live in luxury, as long as they keep the once-vacant houses in pristine condition … and clear out in a hurry when someone wants a showing. Home managers bring their own belongings, but don’t disturb their surroundings. They are relocated when a house goes off the market. And they learn to live without clutter. Any clutter. Like, at all.
“There is a higher perceived value to a home versus a vacant house that looks like a distressed property,” said Saavedra, who called ghost home ownership a “different” lifestyle.
No kidding. Tampa Bay Times reporter Drew Harwell spoke with Bob and Dareda Mueller, home managers who were living in a $750,000 property with their three grown sons. The Muellers were hit hard by the housing market crisis, they say, and now both work at a fast-food restaurant. Their current residence “graces the 10th hole of an exclusive golf course in one of Tampa’s wealthiest suburbs,” Harwell wrote.
Showhomes pays moving costs but the Muellers pay the firm about $1,200 in rent, plus all household bills. Showhomes decorators decide where things should go, and managers are responsible for faultless precision, enforced by rigorous, random inspections.
All surfaces must be regularly cleaned; weeds eradicated, car oil spots removed. Clothes in closets are to be organized by color, and contestable items — heavily religious books, personal photos — must be removed or neutralized. Every item has a rule, and everything must be exact: the rotation of pillows, the fold of towels, the positioning of toothbrushes. Even the stacks of novels casually left on the bookshelf are placed and angled with pinpoint detail.
This next-level home-staging arrangement is also good for divorcees or empty-nesters — basically, people in the midst of a life transition who own great stuff and are looking for a property to match, Saavedra said. She told the Tampa Bay Times that “the home managers act like human props.”
The Showhomes deal with the Muellers, Harwell wrote, allowed the family “to start over with the painstaking gloss of perfection, but it has also brought up tough questions about what it means to have a home. Is it worth sleeping in a mansion if it means living as a ghost?”
Brenda Hendryx, 49, came to Tulsa, Oklahoma to attend college at Oral Roberts University where she received a BA in social work. Upon graduation, Brenda became a licensed nursing home administrator and has been in the industry for the past 17 years. She most recently served as the Executive Director at Southern Hills Retirement Community. Jean Hendryx, 51, was born and raised in Tulsa, Oklahoma. He attended Oral Roberts University and graduated with a BA in Government and minor in German. He even traveled abroad to Germany where he lived in Munich for three months while taking a language course at a local institution. After returning to the states, Jean dabbled in several different industries including U.S. Senate administration in Washington D.C., land fill management, and automotive engine re- manufacturing before finally landing on the decision to obtain his real estate license in the Oklahoma.
How did you learn about Showhomes?
The Hendryx family learned about Showhomes through their friends, who were realtors and owned the local Tulsa Showhomes franchise. When their friends went through a health scare in 2013, they were looking to quickly sell the business, so the Hendryx’s stepped in and traded their home for the franchise. Brenda says, “That is how passionate we felt about the Showhomes business. We traded our home for one!” Their home was appraised at roughly the same price as the business, so it was an even trade.
Why did you want to work with the brand?
Through our friends (who owned the Tulsa Showhomes), we were able to receive personal insight about how good the franchise was and how relatable it can be to people. Also, we could cover the cost and I was able to use my creative gift of design and pursue my passion for home design/decor. Showhomes also provided us with the freedom and flexibility to run the business mostly from home. Jean really liked the business concept and that they could run the business from almost anywhere.
How has business been since the takeover? And when was the takeover?
We purchased the franchise in March 2013, but had to wait until July 1, 2013 to get it up and running while we received our real estate licenses in the state of Oklahoma. Since then, we have doubled the business.
Throughout the past year, the Hendryx’ and their daughter have been acting as home managers themselves and have lived in two Showhome homes before recently purchasing their own home on two acres, which they plan on using to build a warehouse for their inventory of furniture. (They are currently renting storage space). Also, they now have a new yellow Labrador puppy since they are no longer living in a Showhome, which for the most part restricts pets from the program. “It’s really up to the homeowner, we find that the homeowner(s) are usually okay with pets if they had pets themselves, otherwise they are usually not okay with pets.”
What services are you performing the most?
The core of our business is home managers. We currently have 20 homes being managed by Home Managers. We also are working on two home redesigns and then we usually have 1-2 homes we stage per month (these are unoccupied homes).
Are there any employees or contractors you work with regularly?
We currently have one part time employee and one broker who we work with, but business is booming so much we are looking to bring on another full time employee.
Are you involved in any community outreach programs?
Jean serves on the Sales Associate Committee of the Greater Tulsa Association of Realtors.
Do you have any future plans for expansion? Future plans?
We are currently entertaining the idea of purchasing a second location in Oklahoma, possibly in the Grand Lake area.
Is there anything else you would like to add?
I strongly feel that we are helping people with Showhomes. I have gone through some personal hardships and because of it I care about others and know that some people in this industry may also be going through a difficult time while working as House Managers. Whether a financial hardship, a job change, a divorce or a death, these people are all coping with their own personal struggle and I think we are helping them get on a new path in life through Showhomes. We are helping people live in nice homes for sometimes a third or less of the cost of what the rent would normally be, which gives them the time and opportunity to focus on areas of their lives that need their full and undivided attention.
Founded in 1986, Showhomes has helped Realtors® and homeowners sell more than 25,000 residential properties worth more than $8.5 billion, by transforming high-end vacant houses into fully-furnished, inviting, valued Showhomes. Currently serving prominent communities in 20 states, Showhomes is a rapidly expanding franchise system with 61 offices nationwide. Boasting the expertise of long-time real estate and interior design professionals, Showhomes is a one-stop-shop for home staging, home redesign, “One-Day Makeover’s” for currently occupied homes and its proprietary Home Manager program – a proven model to get upscale vacant homes off the market, faster. Every major national media outlet in the U.S. has praised the work of Showhomes, the company’s work has also been featured on Oprah, HGTV and the Travel Channel. For more information or to learn about franchise opportunities, please visit www.showhomes.com.
Matt Kelton is chief operating officer of Nashville-based Showhomes Franchise Corp., the parent of home staging franchise company Showhomes. The company has 60 franchise offices in 20 states and is transitioning this year to provide expanded services.
Post Managing Editor William Williams briefly chatted with Kelton to get his take on the business.
WW: The company is adding various interior services, such as carpet and countertop replacement. And you are looking at exterior offerings. Where could this lead?
MK: Showhomes began as a home staging franchise and we have evolved due to customer demand over the years. We have become a “one-stop shop” for any needs of the home owner in regards to the interior décor and updating of a property. We currently are only focused on the inside of homes but we plan to expand upon the curb appeal aspect, which would result in adding landscaping services. Instead of a home owner having to deal with four or five different vendors, Showhomes could be the sole source project management team to handle all of their needs.
WW: How were you first quarter numbers?
MK: Showhomes contracted 190 new homes with a total list price value of $134 million in the first quarter of 2014. Overall revenue (compared to was up 25 percent for continuously operating operations.
WW: You added eight franchisees in 2013. How many do you want to add this year?
MK: [We] plan to add 20 new franchisees in 2014.
WW: Showhomes is based in Nashville but you spend a lot of time in Dallas. How does that work?
MK: We are a virtual company with operations staff in several cities including Dallas, Chattanooga and a few in Central California. All of our systems are cloud-based and with email, conference calls, Skype, Google Hang-outs, and more it really doesn’t matter where we are based. Our franchisees have online manuals along with our custom-based CRM system to run the business, which is all in the cloud. I spend lots of time on the phone and on Skype.
WW: Why is there not another company that provides home staging services and that is, at the least, fairly national in scope? The industry seems fragmented. Your thoughts?
MK: There isn’t [a company] that I am aware of that offers staging on a national basis. There are some stagers with offices in different cities but no one that has a nationwide presence like Showhomes. There are quite a bit of moving parts to the model and if you don’t have the systems, back-office support, and name brand like Showhomes, it can be difficult to get momentum. We have made many of the mistakes someone starting out on their own would make trying to figure out this business. That’s really one of the great things about franchising.
Marty Barnes from The Entrepreneur Source recently wrote a great blog post about one of our long term franchisees Donna Muelver. Great overview of the fascinating people that are part of the Showhomes family.
“Our Entrepreneur this month wasn’t looking for a franchise and had little interest in owning one. But sometimes the franchise just finds you. Donna Muelver answered the door when opportunity knocked and she is happy she did.
Donna Muelver was a stay at home mom and foster parent and her husband Rick was a firefighter. One day a friend told them about a real estate sign installation company that was for sale. It was a struggling company with potential. Donna could run and market the business and her husband Rick and eldest son Wayne could help out with the installation of the lawn signs. They did this for over 10 years, increasing sales and adding real estate photography to their basket of services. And then, opportunity knocked again.
Not so, says Realtor Joe Finnerty, of Prudential Patt, White Real Estate. Finnerty and his clients encounter homes with dirty dishes in the sink and an overflowing cat litter box.
“A part of you wonders: Did the agent tell them what to do?” said Finnerty, who has an accredited home stager on his team. “I have heard sellers say before, ‘If somebody really wants the house, they will overlook that stuff.’ They won’t.”
Real estate agents and home stagers say the surefire way to sell your home fast is staging, either with the help of a professional or by following the simple, effective rules of the trade.
A house that sells fast is clean, clutter-free and looks well maintained. Staged homes sell for about 8 percent more money since they sell faster, Finnerty said.
Real estate agents and professional stagers alike agree the window to make a good impression is small. An effectively staged home allows potential buyers to envision moving right in.
“Allow the buyer to see the house, not the seller’s belongings,” advises Therese Kelley, president of the Lehigh Valley Association of Realtors.
Most buyers will first see your home online, so you want stellar photos that show all aspects of the house, said Nina Evangelista, owner of Staging It. She warns that clutter jumps out in photos.
“If they don’t like the pictures, they won’t call. The better the photos, the more traffic you will attract,” she said. “The more space and the cleaner the home appears, the faster the sale.”
If an online listing piques a potential buyer’s interest, most then hop in the car and drive by the home, Evangelista said. That’s why sellers need to evaluate their entire home with a critical eye starting with the view from the street.
Lawns should be well maintained, and if it’s spring or summer, plant flowers, Kelley said. In fall or winter, make sure leaves are raked and walkways shoveled. Give the front door a fresh coat of paint and put new numbers on the house.
“It makes the prospective buyer think they really took care of this home in other ways,” Evangelista said.
If the target buyer is a family with children, list your home in the spring, said Shoshana Gosselin, an interior designer and stager who owns Love Your Room. Families don’t want to uproot their children mid-school year, so they typically aim for a summer move.
The house should be spotless. Get carpets shampooed and drapes cleaned. Eliminate pet or food odors and send Fido to the neighbors. Ditch the tchotchkes and take down the personal pictures.
“If you go into a living room and the whole wall is covered in family photos, it’s hard to picture yourself there,” Finnerty said
Buyers are nosy
Prospective buyers aren’t like polite house guests, warns Gosselin. They will be looking in closets and storage spaces, so start packing and purging.
“You want them to open a closet and see how big it is, not all your shoes,” she said.
Replace dated light fixtures or draperies. Make sure light bulbs are all working and turn all the lights on before a showing, Kelley said.
“Little updates, details are what sell a home,” Gosselin said.
Has your wife been nagging you about that door that sticks for years? Chances are, Kelley said, buyers will notice that too. Save yourself the trouble and fix it before your home goes on the market.
Paint and carpet are two of the cheapest and biggest updates a seller can make. Slapping a fresh coat of paint on the wall has a 109 percent return on investment, Evangelista said. Stick to neutral colors and bring in pops of color with accessories, said Gosselin, who recommends Benjamin Moore Marble Canyon as a buyer-friendly paint color.
Solutions big and small
Fixes don’t have to be expensive.
Put that dated fire screen in storage and let the fireplace shine with a fresh stack of firewood, Evangelista said. Or swap out the kitchen hardware.
“You want to appeal to a vast amount of people,” Evangelista said. “Not to one small unique set of people.”
The return on investment for major updates like a new furnace or roof is tricky because buyers expect homes to have these things.
“If you pay $6,000 for a new roof, we can’t raise the price by $6,000,” Finnerty said. “It definitely makes it more appealing. If the roof is totally falling down, you will get every penny’s worth back.”
If you fear the age of your furnace could be an issue for potential buyers, Kelley suggests having it serviced and finding out the replacement costs since it will impact your bottom line. Savvy buyers check a unit’s service card, she said.
Real estate agents agree vacant homes are the hardest to sell. If the owners have moved out, Kelley and Finnerty strongly advise renting furniture and staging a home.
Stagers offer tiered services ranging from one-time consultations to total home overhauls with new furniture and accessories. One-time consultations typically result in a report with suggested updates.
If you can’t afford to hire a home stager, ask your real estate agent for help.
Know your target buyer and get your home ready for that person.
Eliminate niche and personal items from your home.
Rooms look smaller without furniture, so placing just a bed in a room helps buyers with scale.
Small, inexpensive updates can make a huge difference.
There are many houses on the market that are currently sitting vacant all across the country. Many are foreclosures, short sales and bank owned properties, but thousands upon thousands that are owned by traditional sellers who are current on their mortgage and are trying to sell the property for one reason or another.
Many property owners are choosing to downsize in this tough resell market. Some owners are choosing to upsize, and take advantage of the favorable interest rates and lower home prices to move up into a bigger home. And there are the people who move and relocate for job, family, health, or retirement purposes. For many reasons, there are countless numbers of property owners in today’s market who own 2 houses, with one sitting vacant and listed for sale.
Vacant homes attract problems. From break ins, to vandalism, to an unkempt yard and bad landscaping, missing AC units, utility costs, broken pipes that go unfounded for a long time, and others, there are many reasons not to want a vacant house sitting for too long.
Not to mention there are certain cities across the country where vacancies are more prevalent:
But there are real options to consider for your sellers with vacant houses. Here are some viable solutions to the vacant house not selling headache faced by many:
Rent the house
You’ll need a standard lease agreement applicable in the State your property is in. Or your seller can hire an experienced real estate agent or leasing agent to help lease up the house as well. It’s important the owner has someone who is experienced in leasing (and licensed in most cases) complete the lease agreement and any other applicable documents. Owners tend to want to save money and do things themselves, only to do them the wrong way and subsequently lose money and time. Plus, if an owner doesn’t follow the landlord-tenant laws in their respective State, the owner could become the defendant in a lawsuit even when the tenant doesn’t do what he or she is supposed to.
Do a lease with option to buy
Similar to the lease agreement, a lease with option to buy includes the lease plus a separate purchase addendum. The purchase addendum gives the tenants the option to buy the house they are living in for an agreed upon price and within a certain time frame, usually running concurrent with the lease agreement. If the tenants don’t exercise their option to purchase the house prior to the end of the agreement, they can either move out, or renew the agreement with the owner.
Many people call a lease with option to buy a lease purchase, rent to own, and other misused terms. I specifically use “lease with option to buy” because I want to make it clear the tenants are still tenants, not “property owners”. If the tenant doesn’t pay, the owner would evict just as he or she would on a regular lease agreement.
Contact a staging company such as Showhomes
I’ve professionally used a company called Showhomes on many of my vacant listed properties in the Greater Kansas City area. I know Showhomes (and there are probably some other similar companies) is in many major metropolitan areas across the country. I’ve found the benefits of using a company such as Showhomes are many.
One, there is no upfront fee. Two, the vacant house gets both staged and occupied for the duration of the contract period (usually until the house sells). Three, someone else is paying for utilities and yard care. This is HUGE if your vacant house is in a winter climate! Fourth, there are no long term contracts with tenants; rather Showhomes uses home managers who are independent contractors with very short term agreements. I know from experience a well staged and well cared for house sells quicker and for more money than a vacant one! I have personally had good experiences using Showhomes.
To find out more information about Showhomes go to www.showhomes.com
(And no, I am not affiliated with Showhomes nor a paid spokesperson, just offering personal and professional experiences I’ve had)
Good luck with getting those vacant listings sold!
JJ Pawlowski, Broker / Agent
The Real Estate Investor’s Agentsm
Question: Is My Vacant Home Covered by Insurance?
Answer: I always warn clients that they shouldn’t wait for a vacant home to be vandalized before checking their insurance policy. A little known fact is that most homeowner insurance policies do not extend coverage on a vacant home for more than 30 days.
This means that if you’ve moved out more than 30 days ago, your home may no longer be insured, even though you may have paid the premium for your insurance policy. The verbiage is often in the fine print.
Short Sale or Foreclosure Vacant Homes and Insurance
In short sale situations, often the bank will send out a representative from a preservation company to determine whether the home is vacant. Even if you just moved down the street, these people will change the locks and notify the bank that the home is vacant. The bank may or may not take out hard-to-find and expensive insurance to insure that vacant home. They send the bill to you.
Types of Vandalism for Vacant Homes
It’s not unusual for a thug to cut off a lockbox in the middle of the night and take it home to drill out the key. Then, the thieves can return in the light of day and walk right in the front door. They back up a truck and before you can say “police,” they have loaded the truck with all of the appliances.
A thief does not need to break into a home to cause damage. A thief can swipe, for example, the existing electrical panel and A/C compressor unit fairly easily because these items are generally located on the exterior of the home, in a side yard.
Sometimes kids, just for twisted fun, will throw rocks through plate glass windows to watch the glass break.
In some situations, squatters break in and set up house. These aren’t the kind of people who bring in a table and chairs and use napkins. They typically sleep on the floor and throw empty beer bottles at the walls.
Getting Coverage to Insure a Vacant Home
Since you’re selling as a short sale, I take it you feel that a short sale is better for you than a foreclosure. Perhaps you want to protect your credit rating or make sure that no foreclosure is filed against you in the public records. You sound like a responsible person. To that extent, you may want to start with your insurance agent to find out how much a vacant home insurance policy would cost.
Those fees can vary from 2 to 5 times the amount of your regular insurance policy. Vacant home insurance can often be purchased monthly. You might wonder why a policy that covers an empty house would cost more than a policy that insures its contents but that’s because vandalism is very costly to fix.
Moreover, if your home is vandalized and the bank won’t pay for the repairs — and many banks will not — the buyer might not have enough money to buy your home — especially with an FHA loan — and also fix the damage.
Ways to Discourage Vandalism of a Vacant Home
People who do bad things like break into another person’s home tend to choose the path of least resistance. They want to break into the home that is the easiest to break into and the home that seems to invite them to rob it. Here are some ways to discourage vandalism:
- Put a sign rider on top of the For Sale sign that says “By Appointment Only” or “Do Not Disturb Occupant.”
- Have a friend of relative check on the home daily and pick up mail on the steps.
- Ask a neighbor to park a car in the driveway.
- Install security lights that are activated by motion.
- Set up a lamp on a timer to go on and off at specified times during the day.
- Use a security alarm.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.