Many of us have heard of staging—hiring a design professional to give your house in its best look. Perhaps you have read an article about the benefits of hiring a stager to prepare a home for sale. You may even know someone who hired a stager.
The concept sounds great. You pay a trained and experienced designer to give your house a fresh look, hoping to not only sell more quickly but to get a premium on the sales price. Well, this is all great until your home has been on the market and it doesn’t sell. What now?
You thought you hired a design professional to make your house “presentable” for sale. But you will also need to remember that you hired the stager to act as a designer, not to guarantee a sale. So the fact that a home doesn’t sell does not mean that the stager didn't do a good job. There are many factors involved in a home that have nothing to do with the interior decor (such as the location, the economy, the quality of the school district, and so on).
Presentable may be the key word here, depending in part on what you and the stager agreed to. At the time you hired a stager, you should have signed a written agreement setting forth the terms of your working relationship. This contract most likely contained a paragraph detailing the nature of the work, the duration of the working relationship, the responsibilities of both parties, and a termination clause.
While these paragraphs list specifics, there is no one standard for a look that will make a home "presentable" for sale. Presentable is very much a matter of personal preference, and as long as the items in the contract are complete, your dislike of the stager's presentation of your home is not a breach of contract, act of negligence or other omission.
Quite frankly, you had the opportunity to discuss your disappointment with the stager. The termination clause creates an opportunity for you or the stager to get out of the contract if and when the relationship sours and you reach an impasse. This clause gives either party the right to exit his or her obligations by giving 30 days’ written notice. However, even after notice is provided, the home seller is obligated to pay all outstanding fees to the stager.
In general, a seller will have a difficult time recovering fees paid to a stager solely on the grounds that their house did not sell. Unless there was a clause in the contract that stated that the stager guaranteed a sale within a certain time period, you are likely out of luck to recover money on a simple breach of contract claim.
So what remedies are you left with? A legal remedy may not be what you need to get your money back.
Did the stager you hired break any of the terms in the contract? For instance, were services completed in an untimely manner? Did the stager use dark blue paint instead of the pale blue you agreed on? If so, you have a legal remedy and could take followup action, such as filing suit for breach of contract.
Unless the stager made an obvious error or omission (for example, left a room undone), you will have to show that the stager did not use professional care when styling your home. This is a much harder standard to show than a simple error or omission. It requires showing “negligence” or even a “careless disregard.”
Examples of this would be covering up or patching a leak knowing it needed repair, in order to stop further water damage; or failing to follow building codes or to get local inspections when making substantial improvements. You must show that the designer had the knowledge but did not proceed to act in the way a professional in the same situation would have acted.
The examples above are all pretty clearcut, but in a situation where, for instance, the stager tried a new paint color that was not in line with the current trends or rearranged your furniture in a way that didn’t seem to make the room look bigger, your case becomes murkier.
That does not, however, mean that you are left with no remedy. It may not be the remedy you want—namely getting your money back—but you still may recoup some of your costs. The remedies below involve a bit of negotiation and some business strategizing.
When you start to feel that things are going south, you could give your stager notice that you are going to end the contractual relationship. Schedule a meeting to discuss outstanding items.
At this meeting, make sure you have all items that the stager loaned or rented to you ready to be returned in the condition you received them. Prepare a list of discussion points for this meeting, pointing out each area where the stager’s services fell short of what you expected. Express your extreme disappointment and offer a lump sum that is less than the originally negotiated amount.
At this point, the stager may suspect that you are heading towards taking legal action and accept the amount. But make sure that he or she signs an agreement to accept a lesser amount than stated in the original contract. You do not want your stager coming back at a later date trying to collect an outstanding balance based on the amount set forth in the original agreement.
Since you have already begun changing the look of you home, there is no legal reason not to continue with the home improvements you started. (That’s assuming, of course, that you and your real estate agent still feel they are the right thing to do.)
Some, if not all, of the costs of preparing your home for sale, such as painting and installing built-in kitchen appliances will qualify as costs to maintain an investment, and as such can be deducted from your taxes. So if the house really isn’t selling, you might consider turning it into a rental and recouping some of what you’ve paid this way.
Examples of costs that will qualify as tax deductions for landlords include any repairs that you made during the staging process as well as other items such as mortgage interest and depreciation allowances. To learn more about deductible costs for rental property see Top Ten Tax Deductions for Landlords.
If the stager made improvements that qualify as part of an overall remodeling project, the cost of these improvements will increase the cost basis of your home. This means that when your home eventually sells, you will have less capital gain, which means a smaller tax bill if any at all. (iIf you lived in the home in the home for two of the last five years you owned it and the gain was less than $250,000, you do not owe capital gains tax.).
There is no one surefire way to get your money back when the stager’s work does not directly lead to sale. However. there are ways that you can make a bad situation into one where you can prevent losing more money what is probably the biggest investment you own.