Home Sellers, THE TAXMAN COMETH... but NOT if a Home Stager Can Help It!

Home Stagers have seen first hand just how home sellers have come to enjoy numerous unexpected benefits of staging. The 2 primary reasons sellers initially still choose to hire a stager is they hope to sell their property faster and/or for more money. However, there is yet another positive reason, how a home sellers can benefit from staging, that is often overlooked. Fees for staging services can be considered an advertising fee (See IRS Publication 523) and influence a home seller's capitol gain (or loss) on their property that has been sold. Of course there are rules and restrictions, so here our a short explanation of how a home seller's capitol gain (or loss) is impacted.

What is IRS Publication 523 and what does it say? IRS Publication 523 explains all tax rules that apply when a home seller sells their main home, including advertising expenses and how they influence the seller's capital gain or loss on the property. It does not cover the sale of a rental property, second home or vacation home.

What does IRS Publication 523 consider seller's MAIN home? The term "main home" usually refers to the home the seller lives in most of the time. A main home can be a house, houseboat, mobile home, cooperative apartment, or condominium.

How is capital gain or loss figured on the sale of a seller's main home? In order for a home seller to calculate the capital gain or loss realized on the sale of their main home, they must know the selling price, the amount realized and the adjusted basis.

What is the selling price? The selling price is the total amount a seller receives for the sale of their home, including money, all notes, mortgages, or other debts assumed by the buyer as part of the sale and the fair market value of any other property or services they receive.

What is the amount realized? The amount realized is the selling price minus selling expenses. Selling expenses include commissions, advertising fees*, legal fees and loan charges paid by the seller.

What is the adjusted basis? During the duration of ownership of a main home, increases or decreases (adjustments) may have been made to the basis (base cost, either bought or built, of home). This adjusted basis must be determined before capital gain or loss can be figured on the sale of the home. There are many rules when computing the adjusted basis. Consult a Tax Adviser to accurately determine the adjusted basis.

To quickly estimate capital gain or loss, apply the following formulas:

• First Calculate: AMOUNT REALIZED = Selling Price - Selling Expenses
• Next Calculate: CAPITOL GAIN/LOSS = Amount Realized - Adjusted Basis

*Staging a home for re-sale can be considered an Advertising fee. There are no time limits on the Advertising Fees related to the sale for the IRS. However, it is important to note that if a property does not sell and is taken off the market, expenses for that transaction are NOT deductible in the future.

IMPORTANT: EVERY HOME SALES TRANSACTION IS DIFFERENT. To know how this Tax Rule affects you particular home sale in your state, PLEASE check with a Tax Adviser or Tax Consultant regarding IRS Publication 523 and how it may impact your individual tax situation.The complete explanation of IRS Publication 523 can be found on-line at: http://www.irs.gov/publications/p523/index.html

FAKING Your Home's Staging is Fine, Just Don't be CONTRIVED

While home staging does entail some visual creativity, in actuality it also requires a bit of merchandising and a few marketing "tricks" to get the job done. Unlike the practices of interior decorating, re-design, or even traditional interior design, much of what home staging is that it is the creation of an illusion of a possible lifestyle within a particular house so that it appeals to the largest home buying segment possible.

But it is important to note that in order to create REAL appeal, a home stager might have to resort to some "fakeness". One basic known industry practice (like decluttering or depersonalizing) every good stager relies on is to bring the outside in.

However, while some in our industry suggests that bringing the outside in is as a simple stroll out to one’s garden to cut something fresh and green, in reality this option just might be realistic. While, for some, this might SOUND like great advice to bring the outside in, for others the facts that either it’s freaking freezing and everything is dead in the garden or, oh ya you don't HAVE a garden, you live in a high-rise condo quite often IS reality.

So what can one do to bring the outside in? Well, this is where fake plants can help. Today's silk plants are so "perfect" and so widely accepted that they just blend into the background and, even MORE IMPORTANLY, do not draw the attention of a buyer's eye. Fake fruit works well too.

Also, using fake FOOD as props is a BIG No-No! For some reason, fake food captivates people’s attention… for they love to go up to and look and touch fake food to see just how "real" it looks. A good stager knows, and will advise their client, that anything that distracts a buyers so that they are looking at something other than the house steals precious selling attention.

For homes that are vacant, it is quite acceptable to use fake TV's. Because TV watching is a big part of our culture fake flat screens help a buyer understand how a room can be configured.

That with all that being said, I want to stress the importance that while sometimes "Fake" is fine... it is NEVER OK to resort to contrived trickery. Contrived and “cutesy” staging (Upper Picture ) is staging that just tries to hard. Resorting to gimmicks such as laying out silk gloves, with a single red rose (fake); setting a tray on a bed with a tea cup, a book of sonnets and the word "Love" configured with sticks from your garden; or setting out two champagne glasses wrapped with cute raffia bows on a tub’s edge is just NOT real and not the way most people live.

Because this is typically NOT the way people live, it becomes a contrived distraction to home buyers touring the house. So always remember, the best staging allows the HOUSE to be the star, not the stuff in it. The best and most talented stagers know and easily master the principal that "less is more" and their work is always tastefully understated.

The picture (Right >) of a staged property (staged and photographed this week by Marci Toliver of Fresh Eye Designs) is a perfect and pure example of how to apply an understated "less is more" approach to staging. As you can see, it is a beautifully appealing breakfast nook that is not contrived.

Oh ya, and one more thing, Marci just happened to make that floral arrangement herself…. using fake tulips.

Stage It Forward...
Me


PS: THANKS MARCI... for allowing me to feature this picture of your beautiful work. This is STUNNING staging!

PSS: My company, Real Estaging, happens to use proptronics.com as our supplier for these props. I recently spoke with Darlene, the owner of Proptronics… she graciously offered to give a discount to any stager who mentions this post. Please just ask for Darlene or Michael. HOW COOL IS THAT?

Taberna

I have lived in Eastern North Carolina long enough to know that although spring is tempting us, it is not quite here yet. Despite the fact that the azalias are blooming about as early as I can remember, I bet we will get some frost before warm weather is here to stay. Nevertheless, when I hear the birds chirping in the morning as I leave for work it makes me long for the river.

Last fall my wife suprised me with a kayak and I fully intend to start using it when it gets just a touch warmer. It has long been my intention to explore some of the small creeks that flow into the Trent River, especially up around the Riverbend area. Speaking of Riverbend, I think you will find the most house for your money in Riverbend. Incorporated in the early 1980's it has about everything you could want in a community and the homes are very affordable. Golf, tennis, boating, fishing, walking, and jogging, you name it. Check it out on my website, www.newbern-nc.info, or call me and I will give you the nickle tour.

Growing Membership of Stage It Forward... Creates a United Voice for the Staging Industry

Just what kind of power and impact Active Rain, the online real estate network, is capable of is definitely been proven. Almost daily, one can log on and read great posts crediting it in countless ways for helping create success in so many ways for some many professional that are employed in the Real Estate Industry. But what really is mind boggling is Active Rain is ONLY in its infancy (less than 1year old), so it is hard to comprehend all that is possible in its future.

So while the "big" Active Rain has been so revolutionary, when it comes to the Home Staging Industry, I can personally attest to just what impact Active Rain has had to legitimize and catapult that industry forward. It so happens that the day Active Rain added the "Group" functionality to its site... the Stage It Forward group was born. This past Saturday, that small group hit its own small milestone... the 300th member joined the group. And while that might not seem like that big of a deal to most... for the Home Staging Industry it is quite an achievement.

Active Rain’s Stage It Forward group is one of the Top 10 (out of over 600 groups) most lively and active groups on the site. It has become a gateway resource for GREAT staging information. Members respectfully and FREELY pass along knowledge to both Home Stagers and Realtors alike. Each day anyone can go and read well articulated stories written by Home Stagers from all across the USA and Canada.

Realtors, if you never considered using a Stager, go on in. You will be bombarded with visually stunning examples of what we do… you will find that the Stagers are relentless to make sure you and your sellers understand the power of our craft. This group is quick to share stories that speak of success, after success, after success.

But what is most amazing, and what I am most proud to be a part of, is to see how Stagers enthusiastically help and contribute to the success of their colleagues.

Unfortunately, I have been in the Home Staging Industry long enough to know that there was an underlying negativity that was keeping our industry small. Margaret Ann Innis, a stager that studied at BOTH stagedhomes.com and the Interior Redesign Industry Specialists, described the industry perfectly when she recently commented, “…our industry was fragmented by personalities, training schools, etc. Now there is a level playing field for all the voices of Stagers to be heard. We all bring many talents to this passion."

When Active Rain created the Group functionality... an opportunity to mimic what was already taking place in the "bigger" Active Rain became possible. Stage It Forward created the ONLY free and accessible forum where any and ALL Home Stagers, regardless of where they received foundation training, can go and ongoingly learn and discuss the “ins and outs” of staging.

This just goes to show the power that sincere sharing and respect for diversity can do… for it is moving the entire Home Staging Industry forward into the future.

Stage It Forward...
Me

3 years Ago TODAY, We First Appeared on "STAGE"

Today, is the third anniversary of my first home I ever staged. So, I thought I would reveal the back-story behind my own first home staging experience and how it proved to ME that home staging really works.

Back in March of 2004, after I had completed my studies in interior design at Harrington College of Design, I was asked by a Realtor to "stage" a high rise condo in Chicago, which actually had a lot working against its potential sale. I can remember thinking... "Staging? What the heck is that?" You see at that time, I really knew NOTHING about home staging. So I researched what I could on the web. However, unfortunately at that time, there was not as much information available as there is today on sits such as in Active Rain's Stage It Forward group. But there was enough that I was able to get the "basics" of what staging is all about… which was to de-clutter and let the HOUSE be the STAR not the STUFF in it.So with this new found LIMITED information I did the next best thing I could do... I blended this new understanding with: 1.) My own life experiences of multiple moves (where my father, an account executive for United Air Lines, always had us get the house "ready for selling" each time we were transferred) 2.) My newly educated creative passion (interior design) and 3.) My professional career experiences spanning the past 20 years (sales, marketing and most importantly and helpful... advertising).

I can recall going out and buying nearly $700 worth of props for this 2 bedroom 2 bathroom condo and thinking "what would I do with all these nic-nacs & fake plants when the condo sold?" But, I didn't worry too much... as I figured I could always use the after photos as part of my interior design portfolio. (Odd thing is I DON'T use these photos in either our interior design portfolio OR our staging portfolio.)

Well, anyway, the home staging not only worked... and worked FANTASTICALLY!

The property sold in 10 days, had 3 offers and sold over its original list price! While selling over list is not unheard of, what makes this QUITE unique is the fact that NOTHING had been selling it the ENTIRE high-rise for months as any new owner was going to be hit with a special assessment for new windows. In the case of this particular corner unit the special assessment was going to be an astounding $20,000!

Plus what was also working against the sale was its original kitchen (ugly dated metal cabinets) and there were OTHER units in the same tier of the high-rise with fully renovated kitchens. So you can see why I say much was working against the sale of this condo.

It is no surprise, and rightfully so, that the Listing Realtor still takes great pride in the fact that for over 2 years after it sold this unit held the selling price record for a non-renovated 2 bedroom, 2 bathroom unit in this condominium high-rise.

This whole experience was AMAZING to me… I learned FIRST HAND just how awesome of a marketing tool home staging can be when it comes to selling real estate.

Needless to say, I was SOLD ON STAGING in Chicago… and on that day I became a home stager and Real Estaging was born.

Stage It Forward...
Me

The beautiful NC mountains

While traveling in the NC mountains along HW441 in Cherokee NC I was startled to see a male elk grazing on the side of a mountain about 100 yards off the road. This was the first time that I have seen an elk and they are truly magnificent animals. I later found out they were native to the NC mountains, as were bison, but were hunted to extinction in the 1800's.
Interestingly enough, I also recently saw, for the first time, a pair of bald eagles fishing at Lake New Bern. I had heard of bald eagles nesting in the Croatan Forrest area but was shocked to see a pair in town. Our local bird expert, Dr. Bob Holmes, told me that the pair nest about a mile away on the Neuse River. While we have done a better job of cleaning up the Neuse and Trent Rivers there is still room for improvement.

I confess... We Use the UGLY "R" Word!

(This is Part 4 of a 4 Part Series on Home Staging Transformations. Links to posts 1-3 are below.)

I happen to know among clients, builders & developers, home selling professionals, and even stagers that there are polarizing opinions on a controversial topic in our industry. When asked… everybody is quick to chime in and share their thoughts about one side or the other, some even surprisingly have very strong opinions against the subject. However, these negative opinions, I feel, are quite prejudiced. I believe these people are misinformed and it is their ignorance that keeps the myth and controversy that surrounds the "R" word alive.

Quite recently, we here at Real Estaging lost a client because we began using the ugly "R" word. NOW… this really got my blood boiling. So I am on a campaign to... stamp out the ignorance and prejudice! This crusade will end, once and for all, what is been wrongfully labeled as "BORING" and "UGLY"... and what the “R” word is is Rental Furniture!

To finally end to the Rental furniture myth I have posted a few photos (NOT slick studio production shots) from ACTUAL staged homes we did for sellers all over the metro Chicago region. In each we used rental furniture and then added beautiful BLING from our own extensive prop library. We started our company, having our own furniture in our prop library helped us get started and differentiated us from others in the market. But, as we looked at what we had invested in the furniture and the return on the investment we were attaining from THAT portion of our prop inventory... and we made a strategic decision. If we can not carry it (physically) we won't carry it (in our prop inventory)... instead we would rent it and roll that expense into the fee we charge the client.

For us this strategy is the right decision for 2 reasons: 1.) It was getting WAY to expensive to first PURCHASE and then continuously transport to, move in, move out, clean, repair, store and insure the hundreds and hundreds of furniture pieces we now are placing in staged homes. 2.) We found that Brook Furniture Rental, based here in Chicago with locations in CA, GA NV, TX, and DC, had diverse and MULTIPLE furniture lines, and a strong willingness to work with us.

So, a few months ago, we began working with Brook Furniture Rental and using their furniture in our stagings. I have to admit I have been delighted, for MANY reasons, but the first and foremost reason is they share with us a common commitment to provide the best level of staging creativity and service to our shared clients.

So the next time we have a client that says anything anti-rental furniture... we here at Real Estaging will hold our heads high with RENTAL PRIDE!

Stage It Forward...
Me

POST SCRIPT: This is the 4th and Final blog in a series were rental furniture was "secretly" used. The other 3 blogs featuring rental furniture can reached by clicking on the links below.

• Part 1: Stunning $1.8 Million Home staged in Winnetka Illinois
• Part 2: Staging it Wright in the Architecturally Historic Oak Park / River Forest Areas of Illinois
• Part 3: WOW! This Town-House in Chicago's Bucktown is SOLD just 2 days after Home Staging