The owner of a 6,645-square-foot seaside mansion on close to 10 acres in Maui, Hawaii, spent two years finding furniture to fill his property.
“He traveled extensively to Europe, and then had a lot of the furniture custom-designed for the home,” says Courtney Brown, a broker for Island Sotheby’s International Realty. “The tabletops were made with hand-poured glass.”
Now that he’s put the property on the market for $49 million, those furnishings are staying put. Like many houses around the country, everything—the art, the deck umbrellas, the beds, mattresses, side tables and lamps—comes as a package under the purchase price. But while brokers, sellers, and even many buyers consider package deals along these lines a bonus, there are nuances to selling a fully furnished home that set the transaction apart from more traditional listings.
“Of course, a buyer could say no to the furnishings,” says Brown, who’s representing the property. “But it’s very unlikely here on Hawaii. Even if they didn’t want it, they could redesign things gradually, later.”
The Hawaiian property is an extreme case for multiple reasons. Its price puts it at the pinnacle of the property market, generally, and its location 2,470 miles from California means that getting anything there takes time and a lot of money.
“It can take two to six months to get something shipped to Hawaii,” Brown explains. “So if you’re purchasing a home here and not taking the furniture, it’s actually an inconvenience for both the buyer and the seller.”
But on the mainland, where many houses also come furnished, both the justification for the furniture’s inclusion in a sale and the way that brokers calculate the value of that furniture can be a lot more complicated.
Seller Expectations
When a home comes furnished, it’s up to the owner to figure out how to price that furniture. For people who’ve spent small fortunes on interior decoration, that process can start with a hard truth: Those costs will almost certainly not be recouped.
Even for a house such as a $9.8 million Maui villa designed by icon Ettore Sottsass and filled with Memphis furniture, it’s hard to imagine a premium placed on the furnishings, rather than a discount.
“As a seller, you’re really attached to things, or you’re emotionally invested in the place,” says Michael Costello, a Douglas Elliman broker who currently represents a $1.65 million, two-bedroom, two-bath, furnishings-included condominium in Palm Beach, Fla., whose owners hired an interior decorator to tailor every furnishing specifically to the home.
“For us, the dream scenario is someone walks into a house and they love everything—the floor, the paint color, the furnishings. But very rarely will someone come into a place, buy it, and not want to change something,” says Costello. “As far as calculating what it’s worth: First, you start with the value of the apartment unfurnished and then add a small number on for the furnishings themselves. So if you’ve put $200,000 into the apartment’s decoration, you build maybe $75,000 into the cost.”
The discount isn’t always that steep. In San Jose, Costa Rica, architect Jaime Rouillón lives in an apartment in a building he designed. He spent years decorating the two-bedroom, 1,991-square-foot apartment, says broker Alejandra Ibarra of Costa Rica Sotheby’s International Realty; now that he’s put it up for sale, listing it for $1.15 million, he’s hoping to recoup his initial investment.
“The value he’s given every piece is the amount he paid for it,” says Ibarra, who’s representing the listing. “He’s not assigning anything sentimental value.”
Without the furnishings, she estimates that the apartment would sell for about $950,000, but Ibarra says that the furnishings still represent a deal for buyers. Rouillón, who’s known for his high-end interiors, filled the apartment with “stuff he’s been collecting his entire life,” she says. “Every piece he bought is almost like art.”
Buyer Reaction
Not every buyer wants the furniture that comes with a house, but at the very least, it means that they have leverage to ask for a better price.
“There are some buyers who aren’t interested in the furniture,” says Scott Davidson, an Aspen, Colo.-based broker for Christie’s International Real Estate. “And if that’s the case, it’s part of the negotiation.”
Fully furnished homes seem to make the most sense in vacation destinations, where buyers want to start using the place as quickly as possible. It particularly makes sense when you’re dealing with homes for the super rich.
“It’s pretty common here to include the furniture in the purchase price,” says Davidson. “So many buyers have two or three different homes, and they just don’t want to go through the process of having to shop or get interior designers.”
That’s similar to a recent venture in Hong Kong, where a developer built $75 million villas that were filled with furnishings that included Christofle cutlery.
Davidson represents a $21.95 million, three-bedroom penthouse in Aspen that comes fully furnished. The style of the apartment’s decoration, which he describes as a “contemporary aesthetic, with sleek, low profiles and clean lines,” is a particular draw, he says. “Antiques, or beefy furniture, is less desirable—unless it’s midcentury, of course.”
In a sense, then, many furnished homes find buyers through self-selection: If someone doesn’t like the interior decoration, there’s a good chance they’ll buy something else. This is particularly true in a market such as Aspen, where there’s a glut of high-end homes on the market. During the first quarter of 2019, luxury inventory in the area expanded 23.8 percent year over year, according to a report by Douglas Elliman, while the discount on sales increased slightly year over year, to 15.3% off the asking price.
And in the case of a $1.9 million, four-bedroom, 3 1/2-bath house in Banner Elk, NC., from the founders of Furnitureland South (“the world’s largest furniture store”), they would have to find something else. The furniture is a mandatory part of the sale, at an additional cost of $225,000. (That means the actual cost of the house is $2.15 million.)
A buyer, says the listing broker Derek Rowley of Premier International Realty, will be a buyer interested in the furniture. In the meantime, he says, they’re using it as a vacation home and “enjoying all four seasons with their family,” he says.
“They’ve got his very special home with a unique design,” Rowley continues. “And the right buyer will find it.”
One Man’s Trash …
Given the vagaries of taste, though, even when buyers pay for a fully furnished home, there’s a very low probability it will stay furnished the same way for very long.
“Our Habitat for Humanity has to be one of the best shops in the U.S., because so many people here just do away with their furniture,” says Aspen’s Davidson. “I had another penthouse I sold in downtown Aspen two years ago—fully furnished and totally accessorized. But the seller didn’t want it, and the buyer didn’t want it, and so we had Habitat for Humanity come in and take everything, down to the toilets and doors.”
Even the Hawaii mansion might meet a similar fate, though at that $49 million price range, it’s slightly less likely.
“A lot of my clients take a home fully furnished, make the first visit, live in it, and then start decorating,” says Brown. “Then they’ll set up a donation to a local charity for the furnishings they don’t want.”
This article was provided by Bloomberg News.
