By: Carter Jones, Minneapolis / St. Paul Business Journal
Posted: June 10, 2022
Pandemic-related supply-chain challenges have shaken up consumers ability to buy everything from cars to school lunches. Now the effects are being felt in the luxury real estate market.
Buyers needing to furnish a mansion are now faced with delays that can take upwards of a year for a high-end couch and other fittings to be delivered. Multiplied over thousands of square feet of living space, that becomes a big problem. However, buyers have found a workaround — purchasing some or all the existing furniture in their new home.
Lynn Reiners, a residential real estate agent with Compass Inc.’s Wayzata office, said she’s used to seeing buyers negotiate over one or two large pieces, such as a grand piano, but now they’re interested in a larger quantity of items.
“It’s amazing how often it’s happening,” she said.
John Wanninger, an agent with Lakes Sotheby’s International Real Estate, said the practice is common in recreational markets, but expanded to the Twin Cities and other nontraditional markets following the pandemic.
He estimates as many as 75% of his deals include some level of furnishings on top of handing over the keys.
Wanninger said the practice becomes a convenience for the sellers, as well. This is especially true when sellers are moving from a single-family home into a condo where they don’t need a pool table and a giant sectional.
“Nobody wants to have a weekend with Craigslist,” Wanninger said. “Why not hit that easy button?”
T. Cody Turnquist, another Compass agent in Wayzata, said almost every transaction he’s doing involves furniture and other personal property.
The practice is especially prevalent when a home’s furniture specifically matches the architecture, he said. These turnkey packages are enticing, but asking can sometimes backfire.
“Sellers take offense: ‘I’m not selling you my furniture, too,’ ” he said.
It’s every agent’s nightmare to deal with personal property, Turnquist added. So agents do everything they can to steer the negotiation directly between buyer and seller. For that reason, personal property is rarely listed as a line item on electronic certificates of real estate value (eCRV) filed with the Minnesota Department of Revenue.
One exception was when a 17,992-square-foot home in Orono sold for $8.8 million earlier this year. The eCRV for that transaction included $300,000 worth of furniture.
Turnquist said it’s rare to see such transactions formalized in a purchase agreement because banks are hesitant to write loans when furniture can be removed.
Home stagers feel the pressure
Supply-chain challenges are also squeezing home stagers, who spruce up listings with everything from minor accents to fully stocked rooms.
Wanninger said he’s now seeing buyers walk into homes and try to buy staging furniture.
“Even though staging furniture is not Henredon, Baker and Stickley, it still looks good, and it’s there and it’s convenient,” he said.
Wanninger relayed the story of a recent client who bought $30,000 worth of staging furniture to fill in the blanks when they upgraded from their previous home.
Sharon Larkins, owner of St. Paul-based Register Redesign, has a warehouse filled with enough furniture to stage 35 homes at a time.
Larkins said people are asking her more than ever if they can buy her staging furniture. However, it’s something she only does on a limited, case-by-case basis.
“I don’t sell them for cheap, because there’s a massive inconvenience for me,” she said. “I only make money when I put furniture in people’s houses. So, I need this stuff even more than they do.”