Reduce Your Staging Liability

November 17, 2020

Studies show that staging a property can lead to a higher sales price and a quicker sale, whether in a buyer or seller’s market. But novices’ mistakes—such as a lack of insurance or minimalist vignette staging that fails to convey the full attributes of a room—could have the opposite effect or even pose some liability issues for you or your client, said Shell Brodnax, CEO of the Real Estate Staging Association, during Monday’s “Staging to Sell” session during the all-virtual 2020 REALTORS® Conference & Expo.

Brodnax highlighted some staging red flags—a top one is attempting to hide serious flaws, like covering mold with paint or concealing damaged floors with area rugs.

Professional stagers should be aiming to “merchandise” a home—that is, showing it in its best light, advising on necessary repairs, cleaning, decluttering, painting, addressing curb appeal, arranging furniture, and prepping it for in-person showings and for cameras. Many stagers offer a variety of services, including remote staging consultations, staging using the owner’s existing items,  color consultations, and full staging where they’ll bring in new furnishings and accessories.

When vetting a stager to add to your real estate team, ask whether they’ve received any training in staging; assess their portfolio (and ensure the photos are of their own work and not stock art); verify whether they have general liability insurance and worker’s comp for themselves or third parties they use; and ensure they use contracts, Brodnax said. (Read more: How to Properly Vet a Home Stager)

“Staging contracts protect you and your client,” Brodnax said. The contract provides a legal document outlining the scope of work and expectations to help avoid misunderstandings. If a stager doesn’t offer a contract, that is a red flag, Brodnax said.

For example, contracts can cover such questions as what happens if the staging inventory is damaged while a home is for sale, and can detail who would be responsible.

Professional stagers should warn clients about such liability. If stagers use their own furniture or rent pieces, a homeowner potentially could be held liable for any losses or damages to staging inventory brought inside their home.

Liability insurance won’t cover damage to inventory, such as furnishings and accessories, when it’s out of a stager’s care. Often, homeowners can’t add this inventory as a rider on their own homeowner’s insurance policy, since they don’t own the items. If the inventory is stolen (which does happen, Brodnax warns) or damaged (such as through fire, flood, or other hazards), the homeowner would have to pay the stager for the losses.

RESA offers Staging Risk Management, a short-term insurance policy that stagers can offer homeowners (at a cost of up to $300) to cover $30,000 of staging inventory while the home is for sale. “The insurance protects them so the homeowner doesn’t have to pay a stager back $25,000 because someone stole it or from the losses from a fire,” Brodnax said.

Also, to distinguish a professional stager from a “hobbyist,” study their work. For example, some hobbyist stagers may turn to “vignette staging” in an attempt to “warm up a space” with minimal items in a vacant room. This may just involve a small table displaying a tray of drinks or sweets or a vacant room with just a decorative trunk and a small area rug in front of a window. “But it just looks empty, unpolished, and unfinished,” Brodnax said. “Staging benefits the buyer by creating a space to enhance the look and feel. Staging is marketing and merchandising a space for the buyer.” Vignette staging doesn’t do that, she said.

Brodnax urges real estate professionals to keep sales stats that compare properties that have been staged with those that haven’t. Do those properties tend to sell faster? Do they tend to sell for more money? “Use your own personal stats to justify staging” to clients and include that data in your listing presentations, Brodnax said.

Brodnax urged real estate pros to consider adding a professional stager to their network. “You may have a title rep, mortgage lender, or photographer, but consider adding a stager to your team,” Brodnax said. “A professional stager on your team can change your business model and you can consult with them on every listing.”