We come across it all the time, in all industries, and the Real Estate market it can be pretty common, whether it’s denounced or not.
False advertising, also known as deceptive advertising, is the act of making misleading or untrue claims about a product, service, or brand in order to induce consumers to purchase it. It encompasses a wide range of tactics, from outright lies to subtle omissions of key information. In Residential Real Estate it can be seen in many property descriptions, and an example would be the number of bedrooms, listed as including rooms which can be used by an owner as they wish, but do not meet the official requirements for being a bedroom, like windows, egress, light, dimensions and so on. Another could be the total square footage, that sometimes home sellers and/or their listing agents, include areas which shouldn’t be, like some basements, attic spaces or completely detached buildings on the property.
That is one of the reasons for Sales Disclosures (or Sellers Disclosures), to protect and inform the parties in a real estate transaction. Clear information in writing, available to all parties, contributes to a successful transaction without a legal aftermath.
Here are some key aspects of false advertising:
Misleading Claims: This involves making statements that are demonstrably false about the product’s features, benefits, performance, or origin. For example, a vacant land lot described in its listing for sale as being “buildable” when it’s really official wetlands and therefore being able to build would require a lengthy and expensive process, if it would ever even be allowed, and could very well be considered false advertising.
Omissions of Truth: Sometimes, advertisers may not directly lie, but they intentionally leave out important information that could sway consumers’ decisions. For example, fire damage or a pest infestation that has been covered up and hidden from the standard home inspection, but is well known to the home seller who deliberately hid it, could be misleading. Let’s also not forget the all to common lack of disclosure of a conflict of interest in a transaction.
Deceptive Pricing: This includes tactics like using hidden fees, bait-and-switch methods, or ambiguous discount offers to lure customers into paying more than they expect. For example, clearly advertising a flat fee listing service that includes a percentage of the sale price hidden in the fine print, is a form of deceptive pricing.
Comparative Advertising: While comparing your product to competitors is generally allowed, it must be done fairly and accurately. Making exaggerated or unsubstantiated claims about competitor homes and listings to make yours seem superior and offer better deals, is considered false advertising.
Consequences of False Advertising: Engaging in false advertising can have serious consequences for both consumers and businesses. Consumers who fall victim to deceptive practices can suffer financial losses, experience product or service dissatisfaction, and potentially face health risks. Businesses caught using false advertising tactics can face fines, lawsuits, and reputational damage. Real estate brokers and agents, and even more so, Realtors (members of the NAR) can face removal from the official list of authorized real estate professionals or other disciplinary action.
Regulations and Enforcement: Several government agencies and regulatory bodies, like the Federal Trade Commission (FTC) in the US, are responsible for monitoring and enforcing laws against false advertising. These agencies investigate complaints, conduct hearings, and issue penalties for businesses found to be in violation.