Stage A Home To Sell, Not To Conceal

By Ronald R. Rossi and Laurel Champion

September 7th, 2016

When “staging” a home for resale, is it “dressed for sale” or is it merely dressed to conceal defects?

If it’s the latter, be warned – the property is also “dressed for a lawsuit.”

It is now standard practice for savvy brokers to encourage their sellers to “stage” their homes prior to putting them on the market. Staging is more than creating an aesthetic plan to highlight the home’s attributes; it also sells buyers on the idea that a certain lifestyle can be created or achieved by living in a particular home.

Unfortunately, some sellers (and brokers) think that staging means hiding defects so that unsuspecting buyers and their agents will not discover them. In this scenario, staging can be a recipe for disaster. In lawsuits we have seen over the years, sellers have staged their houses by, among other things, covering up cracks and painting over areas that show stress from soil instability, water damage, or pest infestation. These defects ultimately reappear after the deal closes, and buyers then question why these issues were not noticeable when they originally viewed the house and decided to buy. Curb appeal is one thing, but an honest presentation is another and far more important.

Recently, we handled a case in which a couple bought a home on the Peninsula with the understanding that it was recently remodeled by a licensed contractor.

The house looked great. It had been freshly painted inside and out and had new windows and doors. The kitchen had been remodeled and looked like it came from Architectural Digest. The master bedroom had a sunken marble tub with Italian tile. Beautiful redwood decks wrapped around the entire home. The property had a newly installed pool. This, the couple decided, was going to be their dream home come true.

Less than a month after moving in, our clients’ three-year old daughter fell through one of the “newly installed” French doors. It turned out that the glass was single-pane, not the safety glass required by law. The child’s arm was severely injured, resulting in permanent scars and impairment.

This was just the first of many problems. The clients discovered the electrical work was done without a permit. Not only that, it was a Code-compliance nightmare. Now, the County is about to condemn the property due to fire safety issues caused by the faulty electrical work. The clients may actually have to move out while all these problems are dealt with, at significant cost.

We had another similar case a few years back in which the sellers covered cracks in the foundation with a cement-like substance that was the same color as the cement. They smoothed over the cracks so that you couldn’t tell the foundation had ever suffered from any problems. Of course, the foundation looked great when the buyers saw it. Not only did the house not last through the first winter, it ended up sliding down a hill.

Putting in attractive new landscaping and vegetation is another common way to stage a home for sale, but it’s also one way sellers and/or brokers hide soil conditions and problems in a home’s foundation. People often remove concrete flat work to make a back yard look more spacious with foliage and beautiful flowers. However, sometimes flat work is taken out because of heaving and cracking, indicating possible soil instability.

If staging is done to conceal defects that would have otherwise been visible to a buyer, this is intentional concealment. When you think about it, what’s the difference between actively hiding a condition and making a statement that the condition does not exist?

Arbitrators, judges, and juries do not like it when they find out that someone actively and deliberately concealed a defect in a home sale.

All of this does not mean that a home should not be staged. A good real estate agent and broker will hire the right people to help sell the property. There is nothing wrong with dressing up a property for sale as long as it is not done to hide defects – and if any defects may appear to be hidden or minimized due to staging, these defects should be carefully disclosed in the sale documents.

Is there anything else knowledgeable sellers can do to protect themselves? The only way to prove what the house looked like prior to staging is to take a video of the inside and outside before the staging is done. This way, the seller can prove what the condition of the property was. The video can then be given to the buyer after the staging takes place but before the buyer removes contingencies, eliminating any unwelcome surprises.

Home defect cases frequently start when neighbors visit the new buyer and tell them about all of the “problems” they know about – problems with the house, problems with the neighborhood. “Didn’t the sellers tell you about the roof leak?” “Did they tell you about that neighbor two doors down?” “Didn’t they mention the soil conditions?” Every neighbor wants to be a good neighbor, and that helpful good-neighbor chat often puts a new homeowner on notice of issues that weren’t apparent or disclosed prior to purchase.

Like the rest of us, buyers do not like negative surprises, and when they’re surprised by the discovery of a defect in their new home, they’ll react – often by hiring a lawyer. If the agent stage the home attractively without using it to mask defects and a seller provides a buyer with a before-and-after video and makes full and accurate disclosures in the sale paperwork, it’s far less likely that the seller will be surprised down the line by a lawsuit claiming that defects were deliberately hidden by the staging of the property. Instead, the buyer will feel the seller was honest and thorough in making their disclosures and the real estate agent did a great job making sure the buyer was fully informed before deciding to go through with the deal.