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Ask Kathy: How can I get a deal renting a home that is for sale?

If a house for sale is vacant, the owners might rent it out for a bargain rate.Question: Hello there Kathy. You seem to be the source on all things remodeled, redecorated and staged, so I am writing to you to ask if you have any information about how to rent a staged home? My cousin read an article recently in the Los Angeles Times about owners of staged homes who want to rent them out to a responsible party for low rent so that the house is lived in while it is on the market. I am very interested in this concept, and would love to find out how to rent a staged home! I am the perfect candidate. :-) Please let me know if you have any information about this! Thank you, Abby

Answer: Abby, thanks for the kind words. That excellent article ran a few weeks ago in the Real Estate section. The article is no longer available online, but I used my connections (don't I sound important?) and requested the article for you from Real Estate Editor Lauren Beale. She came through and I think it has the answers you seek:

Los Angeles Times
Sunday, May 4, 2008

A sweet place to bunk

Home managers can give for-sale properties that important lived-in look.

By Frank Nelson, Special to The Times

Pockets of people across the Southland are living like royalty without it costing them a king's ransom. Take Jim and Laura Fisher, currently basking in about 5,000 square feet of luxury on the water in upscale Huntington Harbor.

Their Italian-style two-story house has four bedrooms -- the upstairs master overlooks the harbor -- five bathrooms, a library-study, an office, a huge formal living-dining room, a cherrywood kitchen, a laundry room, an outdoor spa and a barbecue. And, of course, somewhere to tie up a boat.

The Fishers don't have a boat; nor do they own the property, which has just been listed for $4.25 million. They do, however, pay only $2,800 a month to live there, less than one-third the going market rate.

Similarly sweet deals are available in mansions, upscale condos, luxury high-rises and even more modest dwellings . . .

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(Photo: Yahoo News)

. . . as homeowners reach for another tool in the ongoing struggle to sell their properties.

The Fishers and others like them are home managers. They live in empty homes, keep them in pristine condition and ready to show at a moment’s notice, and are prepared to pack up and ship out in as little as 10 days once the place sells. In many cases, they also supply all the furnishings.

Something of a cross between a paying tenant and a free house sitter, it’s an option that’s winning support among creative owners and real estate agents who say it’s giving them an edge in today’s mulish market.

“A home looks and feels much more beautiful with nice things in it, furniture and personal things, and someone living there,” said Sukie Fee, founder and president of SeaCliff Realty Home Sales & Information Center in Huntington Beach. “It’s a very subtle, almost subliminal thing.”

Fee has used about 30 home managers over the years to help sell properties whose owners have relocated, moved in with relatives or have another home in which to live.

She sees many practical advantages, the most obvious being that a house is not left vacant and uninviting — a place where mail and dust can accumulate and leaks may go unnoticed — or perhaps become a target for vandals.

An empty property, she said, can signal a “sense of desperation” to potential buyers who may reduce an offer accordingly. Just staging a home with nice furniture is expensive and still doesn’t produce that personal, lived-in feel, Fee said.

Home managers can make sure the place is kept heated or cooled, as the case may be, and are on hand to turn on lights and soft music before a showing. In addition, in brand-new homes, managers can help iron out any quirks, such as showers or ovens not working properly.

The use of home managers seems to get fresh legs whenever the market hits a slowdown. Chuck Miller, associate manager and sales agent with Coldwell Banker in Studio City, recalls house managers providing their own furniture in exchange for about 50% off the going rental rates during the real estate crash of the early ’90s.

Although a few regional companies have entered this field, the big fish in the pond is Showhomes, a national franchise based in Nashville that claims managers can help homes sell faster and for “a premium price.”

In return for screening managers for sellers, working with them on furnishing and presenting the home, and paying utilities, Showhomes keeps the managers’ monthly rent payments. The company also receives 0.5% of the price when a home sells; that would be $5,000 on a $1-million home.

Kathy Wright said using a home manager worked for her. She and her husband, Bob, real estate managers and investors who live in Riverside, bought a home in Huntington Beach in July, made a few cosmetic improvements and put it back on the market.

But the 2,800-square-foot three-bedroom home sat empty for six months until the couple changed agents and their new one suggested a home manager. In less than six weeks, they had a buyer at just over $1 million.

Wright said that they could have rented out the house for $3,500 a month but that they then might have had to replace the carpet, repaint and make other repairs when they sold. They also had considered staging it but decided that doing so would cost a lot more than using managers.

Penny Niccole and her husband, Michael, a plastic surgeon, had a similar experience, also in Huntington Beach. They bought a 4,200-square-foot four-bedroom house in the Bluffs gated community, intending to move there.

But they hit a few snags over planned changes to their new home and decided to sell. They got no offers, even after they dropped the price.

Then, quite by chance, Penny Niccole heard about Showhomes from a neighbor. Within two months of managers moving in, the home had sold for $2.6 million.

Showhomes has offices in 22 states, including two in California — one covering L.A. and Orange counties, the other Riverside and San Bernardino counties — and currently has about 40 managers in the region.

Beth George used to own both franchises but sold the Riverside/San Bernardino one last year to concentrate on the Los Angeles/Orange County area, opening an office on Wilshire Boulevard.

Despite the sluggish market, business is brisk, said George, who is based in Newport Beach. “Homes are still selling relatively quickly,” she said, recounting a burst of activity — 11 sales in five weeks — starting in early February. “This down economy is good for us.”

George has had clients with $650,000 homes but puts the average price at about $2 million, with monthly payments ranging from about $1,650 to $4,500. Managers are not covered by tenancy laws, since payments are considered subcontractor fees rather than rent.

Managers, who cannot smoke or have pets, almost always provide the furniture. Normally, people already have suitable things, George said, though they may need to buy a few extras, such as art for the walls.

Most Showhomes managers stay on the job between one and three years, taking assignments typically lasting three to seven months each. When a home sells and the managers have to move, George can usually place them in another of the 20 to 25 properties she normally has on contract.

Three moves in a year might sound stressful, but that’s not the case for manager Cynthia Kayle — all three condos have been in the same Irvine high-rise.

Kayle, a federal employee who leased out her home in Riverside when she transferred to a new office in Orange County, spent three months in a fifth-floor condo. When that unit sold, she moved to a condo two floors down for an additional five months. Then that sale sent her soaring to a palatial 4,300-square-foot condo on the top floor of the 14-story building, for which she pays $3,800 monthly.

The owners have never lived in this new, two-story unit, which has three bedrooms, 3 1/2 bathrooms, an office, a dining room, a laundry, a small wine room and patio, and comes with clear-day views to Santa Catalina Island and a price tag of $3.9 million.

During moves from a 1,500-square-foot condo to one almost three times as large, Kayle has spent about $3,000 on a master bedroom set, a dining room table and chairs, artwork and other accessories.

Keeping the place immaculate and instantly ready for showings is no problem for this 36-year-old, self-confessed neat freak who’s equally unruffled about having to step out at short notice when agents bring prospective buyers through.

Managers must be prepared for showings between 9 a.m. and 7 p.m. daily. Most employ weekly professional cleaners, but even so, it’s not an easy job and requires flexibility and neatness, George said.

The Fishers — Jim, 49, works from home as an energy management software consultant, while Laura, 41, is an interior designer — both grew up in tidy, organized households and instilled similar values into their children.

So, even when all the kids visit at once — the Fishers have four children, ages 10 to 16, from previous marriages — the youngsters treat the home respectfully.

“They understand it’s not our home and they can’t just paint the walls purple,” Jim Fisher said.

Home showings don’t disrupt the Fishers too much either, as they try to arrange them on Sundays when they are already out at church or at their children’s sporting events. Even moving is not the chore it once was.

“We can usually pack up in about two days,” Fisher said. “We’ve simplified everything and use these big plastic tubs. Then professional movers come in. I’d say we can get everything out of a 4,000-square-foot house in seven hours . . . and keep the whole thing under $1,000.”

1 Comment on Ask Kathy: How can I get a deal renting a home that is for sale?

  1. It can be a tricky situation to rent a property while it’s for sale.
    As a Realtor here are some of my suggestions that will make renting the home an asset rather than a burden to the seller.
    1. Month to month lease term (Most escrows are 30 – 45 days)
    2. Have nice furniture and decorating skills. Provide photos of your past homes. (This saves the owner the expense of staging the home)
    3. Be willing to let the agent show the property on short notice, and allow weekend open houses.
    Good Luck
    David

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