Showtime for Showhomes

During the last major southern California housing downturn in the nineties, I spent almost three years as a gypsy moving from one vacant home to another.  I would set up house with all my furnishings until the properties sold and I had to leave again.  No, I wasn’t a squatter - I was a “home manager” - and it was entirely legal.  I even got paid for it, in the form of deeply discounted rents.  (Read about it in my last post:  Housesitting on Top of the World.)

It was fun while it lasted, but when the market began to turn around and sales dramatically picked up, the “home management” business went the way of dial-up Internet access.  Or so I thought. 

Recently, I discovered that one pioneering company has been plying this trade for some 21 years, to the benefit of homeowners and home managers alike.  Showhomes has franchisees in 15 states, and Beth George owns and operates the top-producing office in the enterprise out of Orange County (see an ABC 7 news clip here).   The ailing real estate market has given a powerful boost to Showhomes‘ business:  last year the company broke all the sales records in its history.  So George has opened a new Beverly Hills office to expand service to the L.A. market.  Now, in addition to beachfront homes in Corona del Mar and estates overlooking Newport Beach, George places home managers in properties in tony Valley venues like Bell Canyon and the Knollwood Country Club in Granada Hills.  

Showhomes‘ advantage to the homeowner is that its cost is half that of conventional staging services, George says.   Plus, the presence of home managers means the home is always attractive and comfortable for buyers:  cooled in the summer, warmed in winter.   A furnished, occupied home means fewer lowball offers from buyers who may think they sense distress or desperation.

There are big benefits for the live-in home managers George places, too.  The rental discount is at least 50%, sometimes as much as 75%.  The “Manager Fee” for the Granada Hills home above is $2,500; on the open market it would rent for up to $6,800 according to George.  And home managers are never locked into a lease.   The downside, of course, is that as soon as a property sells, the home managers’ clock starts ticking backward toward close of escrow.

One surprise is that 40-60% of Showhomes’ inventory is new construction.  There are advantages for builders/developers here too.  One 7,000 sq. ft. property in Fullerton proved to have a serious sewer system leak that was discovered by the home manager; it was repaired before the first buyer/owner could suffer and complain about the defect.  

Since the Valley falls within his territory, I also spoke with Craig Brown, General Manager for the Los Angeles area.  He pointed out that homeowners who are initially skeptical of the concept are often converted when they learn more about it.  Homes staged by Showhomes can sell for 10-20% higher and up to 30% faster than if they remained vacant.  And because they are occupied, insurance premiums stay affordable; the cost of insuring vacated homes can double, triple or even be cancelled due to the increased risk of damage and vandalism.  Owners also appreciate the careful screening done to select home managers, who are often single executives, DINK (dual-income no-kids) couples, or other professionals.

With housing inventory bloated, “days on market” increasing and no sign of a bottom in this housing cycle, Showhomes is likely to remain in a strong growth pattern for the foreseeable future.