BARRISTER'S BRIEFING: Virtual Staging or Virtual Misrepresentation?

Brian Levine | December 2019

As technology continues to develop, the fine line of what is permissible and impermissible continually gets rubbed away. Most recently, the issue of staging has jumped to the forefront and perhaps it’s beneficial that we address it as it relates to virtual reality.

Traditional Staging

Standard staging has been popular for decades. With the desire to present a property in the best light possible, agents contact a stager and have them come in to a property and assess how to best show it. After a consultation, the property is often given a “make over.” This can incorporate a variety of things. It can include, decluttering, cleaning, painting, aesthetic updates, and the replacement or removal of existing furniture, carpets, artwork and other personal articles. It can include the use of rented materials such as furniture, carpets, art, books, statuary, televisions and appliances. All of this is done to improve the appearance of the property and to showcase light, space, flow, square footage and a myriad of other beneficial attributes the property possesses. Not only does this work inside, but it also works outside with landscaping and exterior details as well.

Virtual Staging

Over the past few years, we’ve seen the increase in virtual staging. Due to the time and heavy costs associated with traditional staging, software has been developed that takes the general layout/framework of a property, removes a portion or all of the personal items in the space, and creates a blank canvas upon which a Realtor can go in and create a new layout. The walls can be virtually painted, carpets, furniture, lighting, art, bookcases, drapes, statues, plants can be virtually added. The choices are endless and the cost is minimal, as nothing is being bought and no expenses are being paid to a handyman to do the work. Virtual staging works wonderfully for staid old properties, a property that is empty, or one that just needs a little “sprucing up.”

Going to Extremes

Recently, due to market demands, Realtors are going to extreme lengths to create the best impressions possible for their listings. Through virtual staging, they are changing paint colors on the walls and adding wall-to-wall hardwood floors. They are adding chandeliers, large center kitchen counters with waterfall marble tops, rearranging the location of appliances and plumbing, enlarging windows, removing heating elements (baseboard heaters or radiators) and removing sections of wall to create better flow. Outdoors, they’re creating walkways, adding mature trees, new shrubbery, stone walls and landscape lighting. All of this is done in an effort to paint a picture of how wonderful the property could be and to make it front and center in the eyes of prospective buyers. The intention of the Realtor is to make the property as appealing as possible and to act in the best interests of their clients.

The Small Problem with Virtual Staging

It has always been permissible to traditionally stage a property, as the potential buyer assumes that all the personal elements of the home will be removed. All the personal, removable property, called “personalty” or “chattel, including all the furniture, rental furniture, knick-knacks, drapes and rugs are all gone and the property is in “broom-swept” condition when purchased. The only things that should remain is the paint on the walls and the “fixtures,” which are the things that are permanently attached to the real property. Such fixtures include (so long as they are not excluded in an agreement), refrigerator, oven, built-in air conditioning, boiler, plumbing, fixed lighting, built-in cabinetry/bookcases/island, and so on. So, when a traditionally staged home is purchased, there are rarely any surprises.

However, when a virtually-staged home is nearing a sale, certain things may become apparent. When the potential buyer sees the property after the digital removal of the virtual personalty, other things may become very apparent… and often problematic. Because of the Realtor’s creativity in digitally staging the property, perhaps the buyer suddenly notices that the walls are a different color, or there is far less light coming through the windows. Perhaps there was never a chandelier where one was virtually staged. Perhaps no custom plantation blinds existed, but were shown on the virtually staged property. All these virtual changes create discrepancies. All these things add up and have a value. However, more importantly, the price and the expectations of the buyer may be affected, thus potentially affecting the sale of the property. However, these are small issues and can usually easily be resolved.

The Big Problem with Virtual Renovation

The big problem arises when a listing agent, in an effort to go above and beyond for his/her client, goes too far in virtual staging and embarks on a virtual renovation. No longer is it an issue of paint or shutters, or a light fixture. The Realtor has taken extreme artistic license and altered the physical structure of the property. It’s here that the Realtor may run into a misrepresentation problem. There is an expectation on the part of the buyer due to the representations made in the images presented on the Multiple Listing Services by the listing agent that the windows are a certain size, that the hallways are a particular width and depth, that rooms are a certain size, that the floors are of a certain material, that the doors are where they are shown, that walls do/do not exist, that there is actually an island in the kitchen (forget about if it’s covered in marble or not) and the appliances are high-end stainless steel as shown. Virtual changes to these physical structures and fixtures intentionally misrepresent the property. To make these changes could cost tens to hundreds of thousands of dollars. Moreover, in making these changes the listing agent makes the assumption that such changes can be made.

Unfortunately, unless a Realtor is a licensed architect/contractor/engineer and the municipality’s building inspector (which is doubtful), there is no way of asserting that such virtual changes can even be made. What is left is a very large lawsuit, a claim pending with the Department of State for licensing violations and a Code of Ethics complaint with HGAR.

The Remedy

Often, Realtors will post virtual pictures and place in the “Remarks” section that the pictures are virtually staged. However, third-party websites may not transfer those statements, thus negating the agent’s efforts to clarify what is being shown. Sometimes, agents will post images of the original space and then a second photo of the virtual space. Again, a third-party provider may not show all the photographs because of photo limitations so these comparisons are not apparent or become confusing to the public.

What may be seen as the best remedy to avoid confusion is to have a watermark placed directly on the image that states “virtually staged.” However, such disclaimer may not preclude someone bringing a lawsuit for misrepresentation if the property’s physical attributes have been severely altered (i.e. floor-to-ceiling windows where none exist; wall-to-wall hardwood floors; an eat-in-kitchen where only a kitchen galley exists).

Conclusion

Realtors need to act in their client’s best interest and use their creativity to aggressively position their client’s property in this competitive market. It is permissible to take some creative license in virtually staging a property. However, a Realtor must be careful not to erase that fine line between creativity and deception; between good idea and misrepresentation. At the end of the day, the listing agent must ask herself or himself, “If I were to walk into this property, would I recognize it?” If the answer is “No,” it’s time to rethink the virtual staging.

No embellishment, no matter how creative, is worth your real estate license. At the end of the day, a shack should look like a shack, not the Taj Mahal.

Brian Levine
Brian S. Levine, Esq. is In-House Counsel/Director of Legal Services & Professional Standards Administrator for the Hudson Gateway Association of Realtors.