‘Staging’ a home for sale is fine, but it shouldn’t be equated with hiding defects

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

If it is dressed to conceal defects, it is “dressed for a lawsuit.”

Sue McAllister’s recent article in this section, “Dressed to Sell,” underscored this critical component of home selling. Knowledgeable brokers advise buyers and sellers to “stage” their home prior to putting it on the market. Staging is no more than creating an aesthetic plan to highlight the home’s attributes.

Unfortunately, some sellers think that staging means hiding defects so that unsuspecting buyers and their agents will not discover them. Covering up cracks and painting over areas that show stress from soil instability from the buyer, for example. Cracks ultimately reappear, and buyers then question why the cracks weren’t present when they originally looked at the house. Curb appeal is one thing; but an honest presentation is another.

Recently we handled a case where 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. There were new windows and doors. The kitchen had been remodeled to look like something from Architectural Digest. The master bedroom had a marble sunken tub with Italian tile. Beautiful redwood decks wrapped around the entire home. The property had a newly installed pool. It was going to be their dream home come true.

Less than a month after moving in, my clients’ 3-year old daughter feel through one of the “newly installed” French doors. It turned out that the glass was single pane and not safety glass as 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 because of fire safety issues arising from the electrical work. The clients may actually have to move out.

I had another case a few years back where the sellers covered cracks in the foundation with a cement-like substance that had the same color as the cement. They smoothed over the cracks so that you could never tell the foundation could be a problem. Of course, the foundation looked great, because it did hide all the cracks. The house didn’t last through the first winter. It ended up sliding down the hill.

New landscaping and vegetation is another common way to stage a home for sale. But it is also a way of hiding soil conditions and problems in the foundation. People often remove concrete flat work to make the back yard look more spacious with foliage and beautiful flowers. However, sometimes the flat work is taken or because of heaving and cracking, indicating perhaps soil instability.

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

Arbitrators, judges and juries don’t like it when they found out someone actively concealed the defect.

Does this mean that a house shouldn’t be staged? No, of course not. A good real estate agent and broker will hire the right people to help stage the property properly. There is nothing wrong with dressing a property for sale as long as it is not done to hide defects.

But how do knowledgeable sellers protect themselves? The only way to prove what the house looked like before is to take a video of the inside and out before the staging takes place. In that way the home seller can prove what the condition of the property was. Then the video can be given to the buyer after staging takes place but before the buyer removes contingencies to that there are no surprises.

Home defect cases frequently start by the neighbors coming over to the new buyer and telling them about all the “problems.” Problems with the house; problems with the neighborhood. “Didn’t the sellers tell you about the roof leak”? or “Didn’t the sellers tell you about the problem with the neighbor down the street; didn’t the sellers tell you about the soil conditions; didn’t the sellers tell you about this and that?” Every neighbor wants to be a good neighbor and that good neighbor attitude is carried onto the new buyer.

Buyers, like all of us, don’t like surprises. If there is a surprise the buyer will react. If they have already seen the video and see the condition of the property before, they won’t be surprised. They will feel reassured. They will feel that there was full and complete disclosure by the seller and that the real estate agent did a great job in discussing the pros and cons of the house.

Concealment just won’t work, especially when it is done under the guise of staging. Buyers are savvy and will not stand by when there is an attempt to defraud them. Of course, if the seller wants to conceal in spite of it all, I’m sure there are plenty of lawyers out there who will defend the seller to their last dollar.

Attorney Ron Rossi is a senior partner with Liccardo, Rossi, Sturges & McNeil in San Jose.Write him in care of the Mercury News, 750 Ridder Park Drive, San Jose, Calif. 95190