From Van Halen to Valhalla at Showhomes
Staging has been around for decades, but it’s being fueled by a tight housing market.
Just think of the design possibilities if you threw away all of your clutter: accumulated knickknacks, photo albums, gifts displayed out of obligation, mementos reminding us of things we couldn’t forget and the general detritus of children, spouses and pets—you know, those pesky little things that make us individuals. Our living rooms would be as open as an alpine meadow in spring, empty countertops would shimmer in warm sunlight and eating off the floors could be an actual thing.
Your newfound minimalism may sound like paradise until roving bands of homebuyers kick down your front door and steal the keys—but that is precisely the point of home staging, an industry whose services are increasingly on trend in today’s dog-eat-dog real estate market.
Showhomes is one of the pioneers of home staging, formed back in 1986 when interest rates were over 10 percent and blue kitchens were red hot. From its inception, the business has been more than beautifying and simplifying homes to maximize sale prices. The company also undertakes ambitious renovations if needed.
Thirty years later, Showhomes is up to 62 units in 22 states out of 34 individual franchisees. When a home requires more than just decoration detox, those ‘zees step up with fresh paint, new carpets or, in extreme cases, new hardwood flooring or other more involved upgrades.
There’s another facet of the business that’s even more intriguing: placing vagabond executives in homes awaiting a buyer, a service intended to prevent the worries and expenses of a temporarily abandoned house that includes higher insurance premiums or the threat of leaky plumbing. Showhomes Chief Operating Officer Matt Kelton described that rental portion of the business model as “kinda like an Airbnb concept before that was around.”
As the American housing market remains brutally tight, things are moving more toward a buyer’s market, which plays right into Showhome franchisees’ paint-covered hands.
Showhomes ‘zees target higher-end homes.
Kelton, who grew up in a multi-generational franchising family, said the company is prepared for wherever the economy swings next, adding its business has performed well in previous recessions. Because the company’s focus tends to be on the top 20 percent of homes—the swankier, the better—setting one house apart from another gets more competitive when there are more homes on the market at once.
“Especially at the high end, we’re seeing a softening,” he said of current market conditions. “The lower-price, entry-level homes are hot, the economy is still strong, but we’re seeing a slowdown and are seeing that pretty much across the country.”
The so-called home management arm of Showhomes comprises 40 to 50 percent of the company’s sales, so whenever homes take longer to sell and inventory piles up, rehoming wayward executives becomes increasingly valuable.
Beyond corporate executives who pack up for greener pastures more frequently than blue-collar workers, professional athletes and divorcees are additional pools for temporary residents. The symbiotic relationship benefits the home’s actual owner for aforementioned reasons, but also provides discounted fancy digs for those shacking up in the properties.
Kelton estimated the discount to be 30 percent compared with finding a more typical rental.
Showhomes franchisees can also get in the luxury squatting action, with Kelton estimating that 40 to 50 percent of its ‘zees live in such homes, sometimes rotating from place to place for years on end. While the service still sounds novel, it’s been around since Robin Leach called Showhomes one of the greatest secrets in real estate on “Lifestyles of the Rich and Famous.”
“When a home is sitting empty you’re going to see the flaws of the home when you do a walkthrough, you’re going to see dust in the corners, cobwebs—it just doesn’t show as well,” he said. “There’s something about having clothes in the closet, food in the pantry, chocolate chip cookie smells—there’s a lot of sensory things about it versus the home sitting empty.”
Elisa and Brandon Macomber became Showhomes franchisees after Elisa ran her own independent staging business. While going through their due diligence before signing, their worries included whether they’d be able to grow, whether they’d make the revenue they desired and whether the business model would succeed in their home base of Santa Fe, New Mexico, which is an atypical housing market with its funky, artistic housing stock.
With fewer than 150,000 people in greater Santa Fe, the Macombers have seen slow growth for their Showhomes franchise, which they attributed to the unique qualities of the market, as well as its relatively small size. Three years in, the couple has no concerns about the Showhomes business model, but said making contacts within the area’s real estate agents has been more challenging than expected.
“The most challenging is educating sellers and realtors on the science of staging and getting a property ready for market based on factual reasons, not personal style preferences,” Elisa said.
Brandon and Elisa Macomber are Showhomes franchisees out of Santa Fe, New Mexico.
Brandon added their revenue has grown consistently, as well as the average value of homes they’re staging, which increased from $350,000 to $575,000 in three years. That growth has encouraged them to focus even more of their attention toward the top of the market.
With two part-time employees, and both spouses working in the business full time, they each spend a significant portion of time focusing on sales, networking events and the actual work of staging.
As their franchise grows, the Macombers are anxious to see the impact of “virtual staging,” which uses the wonders of augmented reality and high-quality digital reproductions to simulate a quick makeover without all the hauling of artwork, positioning of vases and on-your-knees scrubbing that jobs typically require. They’ve also seen a significant uptick from investors and homeowners interested in vacation property rentals, which is another potential growth avenue.
While staging costs can range from $1,000 to $20,000, Showhomes estimates an average around $5,000, which is paid by the homeowner. Because Showhomes also offers full-service design and renovation services, Elisa added the work requires a lot of creative thought, as well as careful planning to make the biggest impacts without blowing a hole through future sale-derived profits.
“Good staging requires a good eye for design and spatial arrangement, however staging is not interior design,” she said. “Staging is the art of creating a broad appeal to the demographic of price point of the house—interior design is about the personal preference and style of a particular client.”
Goodbye to Van Halen
After years of peering inside the walls of countless houses, Elisa said everyone should reevaluate how much clutter we live with, especially since most of it has no practical use and tends to end up in a trash can at some point.
Kelton said the typical investment ranges from $50,000-$80,000, which includes inventory like artwork, training, professional fees and marketing. Average revenue for franchisees in business three years or longer is $377,000, with top-performing franchisees doing between $80,000-$900,000 of annual revenue.
“Our goal is to be a full-service design and home improvement service for the realtor, so you have one point of contact for the home whether it’s for home management, for updates or design,” he added. “Most people have too much crap in their house, so we’ll take down the Van Halen or Boston Red Sox posters, and depersonalize it, and that can make a big impact.”