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While walking to the next tee, my golf partner and I were speculating. Would the economic retrenchment here in "Upper Hedgistan" lead to an increase in supply, and therefore lower margins, for folks in the "furnishings on consignments" line of business?
Lisa said, "Economy is irrelevant. There are only three things that matter to a dealer: Death, Dislocation and Disgust." We got a good laugh at the time, and I've been reflecting on the statement all week, because those are my business drivers as well.
Death
On Wednesday, a colleague of mine with a wealth management firm in Chicago told me about two surviving young adult sons of a youngish father who had died prematurely. The boys felt overwhelmed by the quantity of belongings and homes that were left to them. After a time, their wealth manager thought to hire a local lifestyle service, who went through the homes and created an initial sort into 3 categories- -personal memory, valuable asset, and tag sale. The service removed everything -- every single thing - -from three houses and consolidated it into a warehouse, by those 3 categories. The family then "shopped" the personal memory section, and signed off on the disposal of the remainder with maximized time savings and minimized emotional strain.
Dislocation
Emotions surface in any move where one person experiences the move in a negative frame of reference, usually due to a lien-holder, a medical condition, or a soon-to-be former spouse. Divorce and Senior Transitions are two very common client situations where we experience the frustration of unwillingly leaving one space for another. The most successful dislocation experiences - -by which I mean least negativity and quickest rebound - -that I see are those where the person rents a fully furnished alternative style for six months to a year. Even where one stays in the same town, the affirmative decision to forego furnishings of the prior life is, for reasons beyond my expertise but not beyond my observation, immediately stabilizing. Tangentially, my favorite divorce word comes from Sandra Manzke at Maxam Capital, who calls her ex "the wuzband."
Disgust
This is the punchline of Lisa's remark, and it is like most jokes funny in proportion to its truth. To skim only the surface of a long list of personal annoyances - -crowded closets, limited bathroom space or snoring -- leads to upsizing. Creaky joints and aging pets lead to one-sizing (moving from a home with stairs to one without). Empty nesters react to years of putting the kids first by me-sizing into properties that are more selfish in location, design and use of space. A strong aversion to living "the next part of my life" constricted by the rules of the past is what the Disgust move is really all about. When we are providing location research for our clients, we approach it exactly like a financial stock screen. The fundamental screen for us? Screen 1 is tangible aversion factors - -what you will no longer accept.
In my business, clients are fighting a two-front war. The first is the tactical demands of lifestyles and households ; the second is surviving the emotional vortex that fate has thrust upon them. Good soldiers on the ground separate the victorious from the fallen.
Last weekend's Wall Street Journal article about how to attract Canadian buyers was interesting reading, especially the part about "throw in the furnishings". Of course the odds are not good that those furnishings are quality, appropriate and in good repair. The real point of the journalist was that time-to-market is a priority consideration for buy-to-let investors.
Here at The Home Zone Company we provision high end winter or summer rental properties for absentee or investment group owners. By "high end" we mean those rentals that the owner intends to maintain in the top 20% of the weekly or monthly rental rates and run at no less than 90% occupancy during peak season for the area. By provision, we mean stock it and stage it from front door to back gate so that it is an attractive rental.
Our client's investment properties are not about fabulosity and vision -- they are about broad, generic appeal to an upper middle income family who want to live comfortably and stylishly while on holiday.
A good overview of the minimum furnishings required can be referenced at the Home Away website. For a more detailed look at what is working for our clients, here's the formula. Basically, you leverage the mindshare gained by furniture retailers that have done the marketing for you all year long...training the eye of the typical high end vacation property renter:- Living and Dining areas for Mountain or Country Properties = Restoration Hardware and warm color tones on walls and fabrics.
- Living and Dining areas for Beach or Summer Only Properties = Williams and Sonoma and cool color tones on walls and fabrics.
- Living and Dining areas for City Apartments = Design within Reach, Crate & Barrel using gold tones throughout.
- Overstock.com for towels, bedding & kitchen appliances.
- We use Wesley Allen for headboards because they are affordable, durable, easily cleaned, charming, custom colored and ship quickly.
What you don't want to do is recreate the same room in each of your properties. It is a little like playing chess - -you memorize patterns but apply them differently for each game.
While I'm giving away all my retail/leverage the marketing spend of others secrets, here are a few more decor practices that distinguish a high end rental.
- Always provide headboards, feather beds and cotton blankets to any bed. Pillows = 2x the body capacity
- Never use a full sized bed. Ever. Period.
- A 3 seater sofa and 2 chairs is always superior to a sectional.
- The best window covering is always a 2" wood venetian blind in the same color as the wall.
- Plates = 2x the sleeping capacity, Bowls = 3x the sleeping capacity, Tableware = 4x and Glasses = 5x.
A final tip: the right look for what is selling, even in slow markets, is usually found at upscale home developments. We routinely sneak a peak at the staged homes by the developers at Crescent Communities, and so can you.
See you at the winter watering holes!
One of the most common sources of lifestyle transition stress that I see is communications failure. Insufficient communication with our family is a habit that most of us are guilty of-- we think "they know" us and our thoughts. Insufficient communication has tangible, unpleasant consequences that can negatively impact the lifestyle transition experience, regardless of whether the move is emotionally perceived positively as an exciting event by the actual mover.
I wrote in an earlier post about adult children successfully talking with an Elder about new and appropriate lifestyle choices. However, sometimes the point of resistance is actually the Adult Children, who don't understand or don't wish to support (for a variety of reasons) a lifestyle transition choice by their parents.
Rather than waiting until a moment of lifestyle crisis to inform or discuss your preferences, we see much better results from Elders who initiate joint family planning session with open, honest & direct interaction. Your wealth manager, family office executive or religious advisor is a good choice for a facilitator.
The two overt goals for this meeting (or series of meetings) are to:
1. Secure respect and support for your personal lifestyle wishes for each stage of your future life, including final arrangements
2. Identify and scope expected financial and lifestyle interdependencies and plan appropriately
This meeting will trigger emotions. In the preparation stages, my clients often experience performance anxiety. During the meeting itself everyone gets caught up in the natural rhythm of surfacing emotions, memories, and concerns. Afterwards, there is typically exhilaration, because my clients feel so proud to have lead by example (yet again) for their children. Celebration, and sometimes atonement, are possible and valued outcomes.
Lifestyle transitions are the result of a planning process, which can trigger the matrix of emotions within a family relationship. Most of us don't shed belongings, or consider a lifestyle change, in a vacuum. Rather than waiting until a lifestyle transition is thrust upon us, my first piece of advice to any potential client is that we are always more effective and satisfied when we are collaborative, communicative and proactive in deciding and implementing our preferences.
Whenever we consider a new property for a lifestyle change or a job relocation or just for pleasure, the same sunny song plays in perfect pitch : Select your new home, hire a moving company and host a housewarming!
To illustrate how much complexity this glosses over, imagine World War II in a similar set of happy talk terms: Select your French Coastal Beach, Send Troops on Ocean Voyages, and Host a Big Parade!
As a practical matter the realtor and mover do the best they can to simplify the process for us. They are experts at their specific responsibilities in the residential asset procurement. Many of our clients here at The Home Zone Company actually go even farther down the outsource-the-complexity path, hiring us to manage the soup to nuts process of first seeking out and then creating day-one readiness for a new lifestyle asset.
On the far right side of the complexity scale is the lifestyle transition that is characterized by downsizing, resizing or simplifying. I take great pains to make sure our clients have a realistic set of expectations about the timing, pain and magnitude of that process. Based on my client feedback, my checklists and project plans, here's a rule-of-thumb, perfect world timeline for our lifestyle transition moves. Click to enlarge.
As you can see, the biggest/longest pain point in this chart, which again is based on real life client experiences and feedback, is rightsizing the belongings for the new residential asset. Rightsizing is the housing industry equivalent of Lord Valdemort. Nobody says the name, and most fear it. Your realtors and movers (who as transaction professionals are compensated solely on the basis of total square footage sold, by the way) always hope Rightsizing is the same thing as Upsizing.
If you aren't Upsizing, you might like to read the book I give to my clients. I'm a big fan of Ciji Ware's book Right Sizing Your Life. Her writing validates the emotions and difficulties associated with a lifestyle transition that involves shedding tangible belongings. She reports on her own struggle to affirmatively make lifestyle choices, and empowers us to move through our own specific challenges. She does a good job of validating the pain while effectively laying out tools to emotionally and practically navigate a right sizing transition.
It has been a busy August here at The Home Zone Company, with one long road trip after another. I have been driving around the mid-south focusing on waterfront or golf community townhomes near school towns like Charlottesville, Knoxville, Birmingham, Tuscaloosa, Baton Rouge, New Orleans and Houston.
I have a new client category comprised of parents of boarding school or college bound kids. Not shocking at all to you perhaps; but when you factor in that this category of clients is my age cohort - -well let's just say I've reframed my thoughts about the necessity for botox and social security.
Upon my return home from searching for school houses, I was tickled to see Louise Tutelian's article in Thursday's New York Times about this new trend of parents who purchase secondary residential assets that are convenient to their kids in college.
This sector of the business is the result of a matrix of interests and conditions. Here are the 5 conditions that inevitably lead to someone hiring our company for research and "home-launch" of an Off to School house:
a. a college or boarding school bound child has an active sports or arts talent
b. in or near a scenic or exciting or cultural area
c. where there are limited comfortable rental or hospitality choices
d. but the parents do not wish to relinquish their mildly chaotic "friends and family" lifestyle with in-laws, special friends, nannies, grandparents, roommates and dogs (rarely cats)
e. and they and the extended family are their child's biggest fans.
What specifically they are looking in this residential asset falls into two categories, inside and outside.
Outside is the most client specific - -whether they are forest hikers, horse lovers, latte drinkers, golfers, boaters, medically dependent, culture vultures etc. --and drives the initial location scouting parameters. Once we have identified the ecosystem, the specific location choices are dependent on visual appeal of the approach and surrounding properties along with appropriate levels of quiet and privacy.
On the inside, this client group is attracted to small work area kitchens with walk in pantries that open onto dining areas that can easily accommodate furnishings for 12. The living area must have over-sized french door access to 10' or deeper porches and landscaped stone patios. Elevators for 2 are in place or must be installable with little disruption to the floor plan. The laundry is front loading and in two areas: one on the upper level nearest the bedrooms that the children and guests will be using and one near the lower level secondary entrance. Tubs are out -- over sized walk in steam showers with built in seating. two or more heads and secondary hand held sprayers are in.
The form that all these "insides" take that is most popular, surprisingly to me, is the high end townhouse or patio home, as long as it has some type of view. Supporting a gardening crew and property manager for a school house is a non starter. Although my clients insist these are limited term investments and they factor in cost recovery in five years, I have to wonder if these bijoux bohemihomes will become the primary residence as my forty and fifty-something clients start thinking about their right-sized 60s and 70s.
At any rate, this has been a fun new category. With the exception of speed traps on I-81 in Virginia, which is an entirely different story, Off to School lifestyle provisioning is like, so now!
Here at Homezone we do a lot of research on various neighborhoods and properties that are appropriate for Empty Nesters. Of course everybody is somebody's baby...and our age 40+ Empty Nester clients often hire us to look into residential options for their age 70+ parents.
If you want to star in your own version of Family Feud, ambush an Elder with an unsolicited report from a presumptious stranger about aging in place. Better yet, arrange a face-to-face family meeting in the Elder's dining room and have the presumptious stranger ask nosy questions and present a dossier of floor plans. "Is she married to the mortician?" was one unforgettable bon mot that was tossed by an ambushed Elder.
Here are some tips in approaching conversations about lifestyle and the home with Elders that have helped me through the prickliest of client meetings. Standard caveats here - -not everything works for everyone - -but here's my high level road map.
1. Be fluent in the lifestyle perspectives that are top of mind to your elders. Reading lifestyle posts in Time Goes By and Aging Hipsters is my approach.
2. Use language that is open, honest and direct. For instance, "Mrs. X, I am an expert in lifestyle provisioning. It's a new approach to how we enable our homes as we age. Your daughter has hired me to share my expertise with the two of you."
3. Get the "nevers" out and honor them as short-term boundaries to the conversation, e.g. "What are the three things you are never going to change about the way you live?" The answers don't have to be scientifically supportable. Your goal is to get a window onto the pain points for the conversation so that you can navigate.
4. Scenario based discussions are more productive than a litany of questions. "Let's talk about living at the lake...describe your day." will elicit a broader range of actionable information, faster.5. Use visual aids, such as decision trees and project timelines, to minimize the perception and mitigate the reality of memory loss or misstatements. Avoid the downward spiral that starts with "But Mom you said...."
Finally, the setting of these early conversations has an impact as well. Our two most successful meetings (the miracle meetings, as the clients call them) were in a quiet little park at the covered picnic table area and at the conference room of the Elder's wealth manager.
Physically and mentally, an Elder's home is a sanctuary that requires an invitation, even if you did grow up there.
This morning I watched my favorite Moxygal, Barbara Corcoran, characterize this as the worst housing market ever because more and more people are comfortable giving the keys back to the bank. Barbara sees what I am seeing, but she misses the mark when she characterizes the walk-away as comfortable.
I am lifestyle provisioner. In a nutshell, my clients hire me as a screener and a sparkplug. As a screener I provide research to narrow down decision alternatives and conduct extensive due diligence. Once a property has been purchased I am the sparkplug to get the whole household furnished and staffed so that my client simply shows up, free to enjoy her life.
I divide my client into 3 tranches - -new locators, relocators, and dislocators. They are all moving, but the emotional context of the move is unique to each tranche. To keep it very high level, in my experience
- New locators are excited, acquiring to accommodate positive personal developments. These are our city space renovators and secondary home buyers.
- Relocators stay positive but are also ambivalent and cautious, acquiring in the shadow of the unknown. These are our executive relocators, retiring couples.
- Dislocators are stressed. I describe them as "hunkered down." A new household is being forced upon them, because of negative spiral in financial circumstances, companionship or health.
My Dislocators portion of the business is driving revenues this year. But there is nothing comfortable for them that I've seen.
For my clients who are facing a move from the 4-6m home, there is shame and confusion and, ultimately, resignation. Here's a rough sketch of how I usually see it:
1. One party borrows against the property to support business investments, adult children, extended family, or lifestyle expenses. Or, (d) all of the above. Although financially savvy, the borrower is embarrassed to be borrowing in the first place, wants it all over with quickly, and assures himself he will pay it off quickly. The financial advisory team has a "let's make it happen" mentality. The loans are low-doc/no-doc with extortionate terms.
2. A business fails or income slows, and the monthly amount due accelerates. Payments fall into arrears. Penalties kick in. The house is carried for about 10 months with increasingly late payments which do not cover the penalty inflated balance. Notice of intent is delivered.
3. Denial, rage, paranoia happen over a period of 6 weeks. The secret becomes burdensome. The spouse is told. The house is staged, landscaped, cleaned and maintained all at the owner's expense to get it sold at a price sufficient to pay the lender. The house is listed.
4. The BFFs think something is wrong but do not conceive that it is financial -- usually a vacation or series of psychotropic medications is recommended and accepted. The pain is postponed. Upon returning from the first vacation, a new financial team of lawyers and realtors goes into action, with the borrower as the sole information exchange. The bank agrees to a stay while the home is on the market, but penalties and interest continue to accrue.
5. Several months pass. The BFF is told about the real reason for the house sale in a conversation about how unbelievable it is the gorgeous home is not selling. The parties agree that something must be wrong -- that the lawyers are no good, that the bank will negotiate, that the realtors are sabotaging the deal. At this point notice of repossession has been received and the family has less than 6 weeks to move.
And this is where I am hired. These clients are exhausted, scared and facing a herculean task of downsizing while ego-bliterated. They are not comfortable turning over the keys, Barbara - - they have been checkmated.
I do not offer an opinion as to how sympathetic (or not) we should be. I will observe that the mechanics are the same as the pay-day loan scandal for the working class or the loan shark for the gambler - - but we articulate much more outrage when it happens to people who "have it made."
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