As 2009 ended, more than 2 million of the 75 million owner-occupied housing units in the United States were vacant, according to Census Bureau estimates. Another 6.7 million housing units were being held off of the market, and presumably a sizable percentage of these were bank-owned foreclosures that hadn’t been released for resale.
The conventional wisdom has long been that a vacant house takes longer to resell than one that’s occupied, or at least furnished. And over the past two decades, companies that dress up vacant homes with furnishings and provide temporary occupants to make those units more showable to prospective buyers have been appearing with greater frequency around the country.
“When we started our company in 1997, homeowners were resistant to having people stage their houses for sale,” recalls Terrie Konsky, co-owner of Hometenders Network of St. Louis, in Chesterfield, Mo., which decorates vacant houses but doesn’t supply tenants. “Now the market is saturated with home tenders; there are at least 10 [companies] here alone.”
One would think that the avalanche of foreclosed homes that now cover many markets would be ripe for home-tending companies. But the half-dozen companies that BUILDER contacted for this article are doing surprisingly little business with banks holding REO properties. And only recently and sporadically have home-tending companies been working with builders to help them lower their spec inventories.
“I’d like to have more builders as clients,” says Glen Crawley, owner of Texas Hometenders in Austin, which he started about a year ago. “There are a lot of spec homes popping up all over Austin. The problem is that they are selling pretty quick.” Randy Bridge, a former Seattle-area builder who owns one of the industry’s oldest home-tending operations—Denver-based Caretakers of America, which he founded in the mid 1980s—says most builders his company works with are smaller businesses “that can’t afford to hire a decorator on their own” to stage their one or two specs.
The biggest company in this arena, Designer Home Tending in Bountiful, Utah, which operates in 11 markets, has had a bit more success helping smaller builders move their products. Founder and CEO Cathy Cardenas notes that a tour her company conducted last year for a Japanese television crew reporting on the home-tending trend in the United States focused exclusively on newly constructed houses that Designer Home Tending was staging at the time.
Before she started Designer Home Tending in 2006, Cardenas spent a decade in radio and TV ad sales. She’s been masterful at spreading the word about the concept and her business, which has been featured in news reports on CBS and other national and local media. “Marketing is what makes the difference,” she tells BUILDER. Lately, her company has been promoting a training program for people who want to start their own home-tending business.
Meet 'The Tenders'
Who exactly are the “tenders” these companies place in other people’s vacant homes? Just about every conceivable demographic is represented, says Larry Andrews, owner of America’s Hometenders in San Antonio, which since 1990 has helped sell 1,700 homes. Tenders include former homeowners who have lost their houses to foreclosure and need a place to live while they get back on their feet; divorced men and women starting their lives over; and renters looking to save money so they can become homeowners. “I just spoke with a woman whose husband is completing dental school, so they’re looking for a place they can live for the next two years,” says Toni Ellis, a licensed real estate agent who started Turnkey Home Tenders in Houston in April. The biggest group of tenders for many companies remains professionals who are relocating and either need a temporary place to stay or want to learn more about the area before they decide where to live permanently. “A lot of tenders are new to the area, and are tending homes as a ‘test drive’ before they buy,” says Andrews. He notes that some of his tenders have liked the house they’ve stayed in so much that they put a bid on it, or hired its builder to build their homes.
Home tending companies offer their services to their clients for free and make their money by charging their tenders fees that typically range from $500 to $1,500 per month, plus utilities. Fees are usually based on what local apartment rents and the house’s current value. For example, Andrews says a tender in San Antonio staying in a $400,000 home would pay about $750 per month. (The lure for many tenders is being able to live for a while in a swank house for very little money.) The criteria for matching a tender to a house often begins with the quality and amount of furniture the tender owns. Tenders are responsible for keeping the house clean and maintained, and the yard mowed and manicured, so it can be shown to prospective buyers at a moment’s notice. (Most companies inspect these houses weekly.) Designer Home Tending claims that homes sell 30% to 60% faster when they are professionally staged and cared for, which is the selling point for other home-tending companies make, too. These companies assert as well that occupied homes are less likely to be vandalized than vacant homes, so the owner’s insurance is safeguarded.
Leases generally run from two to six months, or whenever the house is sold, at which point the tender is typically given 10 days to 14 days to vacate. Some go back to being renters. Designer Home Tending, which has between 250 and 350 tenders at any given time, will sometimes shift its residents in transition to another property when the one they were staying in is sold.
Typical Clients Rarely Include Banks
Home-tending companies’ clients include real estate agents, owners, remodelers fixing up a property to flip it, builders with vacant specs, and occasionally banks, although this last group has not really embraced home tending as a resale tool. “Banks have been wary of home tenders because of their experiences with occupied REO properties and trying to evict those owners,” observes Ellis of Turnkey Home Tenders. Crawley thinks that banks are apprehensive about using tenders because they’re worried about their liability if something goes wrong with the house. But it’s still anyone’s guess what some banks want to do with foreclosed houses they’ve taken back. “We had one guy who stayed in the house for a year before the bank decided to sell it,” says Cardenas. Bridge says his company took over a lot of properties during the S&L crisis in the 1980s, and he’s handled as many as 100 homes at a time that were owned by lenders. But he doesn’t work much with banks anymore. “They’re too twitchy, and it became too much aggravation,” he says.
Cardenas says that home tending was a good business before the current housing recession and will continue to be a good business after the downturn subsides. Last November, her company expanded into Orlando, and “we’ve done very well there. We have several $3 million homes, but we’ll work with any house.” She says she’s recently gotten inquiries from a builder and two real estate agents in New Jersey about providing home-tending services in their market. And she told BUILDER that in the next few months her company would be rolling out a new division “that would help all kinds of people get involved in home tending.”
She wouldn’t provide specifics about this new venture. But over the years Cardenas has seen several competitors fail “because they didn’t know what they were doing. It’s not the easiest business to market, and it takes patience.” She notes that there are as many as 75 forms involved in home-tending a single house.
Crawley of Texas Home Tenders would like to grow his business to the point where he’s got a network of between 300 and 500 tenders, compared to between 15 and 20 residents today. But other home-tending executives say they are in no hurry to expand and are dubious about the new competition they face. “As long as we’ve been here, there have been 17 different home-tending companies that have come into San Antonio,” says Andrews of America’s Hometenders. “Most of them are gone.”
John Caulfield is senior editor for BUILDER magazine.