Have you ever worried if your seller can lie to you about multiple offers when you're considering a property? Are you also worried about this with your real estate agents? Worry no more, as we researched for you if they are allowed to do this. Here's what we found out.
Sellers such as realtors, real estate agents, or even landlords are known to exaggerate offers when selling properties such as houses or land.
Although typically, these lies are harmless and are only said to make the place more desirable to buyers. This could be categorized as false advertising, but it would be challenging to prove.
We have a lot to unpack here, so sit back, relax, and continue reading as we help you understand the topic by discussing additional questions throughout the post. Also, at the end of this article, you can find some informative write-ups that are helpful in your buying and renting needs.
Can your seller lie about multiple offers?
It's already common knowledge that when it comes to selling properties, sellers such as realtors and real estate agents tend to lie or exaggerate that they are getting multiple offers from different potential buyers.
This could seem harmless as they are not lying about what you can expect from the property, as you would be there with them to inspect and personally see the place's current state.
But such tactics can persuade you to purchase the property a little higher than what you could get when you bargain with the realtor.
By stating that the property is highly coveted and that many offers are coming from different buyers, the seller can potentially persuade you to get the property at a different price than the asking one. Usually, higher than the supposed market value.
This makes it seem as if it is a bidding war between you and other buyers, when in fact, the house is getting few offers, and the seller is taking advantage of this. This could be alarming for multiple reasons.
There could be underlying problems why the property is only getting a few offers or the markup of the property is high. That is why doing your research is important, especially if you suspect that you are being lied to by your seller.
Laws Per State (PA, TX, FL, NY, CA, IL)
Since there are no specific federal laws against this, it would be up to the state's regulations to counter this type of practice in real estate. Below are some states' laws regarding lying about multiple offers.
Pennsylvania
For the state of Pennsylvania, the only law against sellers lying to their buyers is the non-disclosure of defects in the property. No laws targeted toward sellers prohibit lying about getting multiple offers.
Texas
The Texas Real Estate Commission rules require real estate practitioners to treat all of their clients equally and fairly. But the Texas Real Estate Commission is not a state branch, and as we said, most states will not have explicit laws regarding this.
Florida
In Florida, there is no law that directly prohibits such practice.
New York
The state of New York also does not have a law banning agents, realtors, and sellers from lying.
California
There are no laws that regulate sellers from lying about multiple offers on properties in California.
Illinois
Also, in Illinois, no laws prohibit such specific practices when selling real estate.
What is false advertising?
False advertising is when a lie is told or presented to you as a fact about something in order for you to be persuaded to purchase the item. This is more common in products that you usually see online or on television.
False advertising can also be seen in real estate, especially if the seller fails or purposely refuses to disclose any defects or problems not easily spotted in the property. This is considered an unfair trade practice and is generally illegal.
Now when it comes to a seller lying about multiple offers, this could be considered false advertising to an extent, but this would be hard to prove as a seller is not obligated to disclose if they are receiving multiple offers selling the property.
Usually, these are strategies a seller employs to create the best deals out of the sale for both parties. In some cases, sellers will refuse to disclose if there are multiple offers for the opposite reason that we said earlier.
Some buyers would potentially see a bidding war against other would-be buyers as negative for many reasons. It could either be a tight budget, or the property is not that desirable for bidding amongst multiple buyers to take place. As a result, this could lead buyers away from the property.
Can I sue my seller for false advertising?
Yes, you can sue for false advertising. According to the Federal Trade Commission (FTC), the following are what constitutes false advertising:
- Unfair competition
- Deploying deceptive tactics
- Fraudulent practice
- Advertising something very far from the actual product
Additionally, Article 12 of the National Association of Realtors Code of Ethics requires that all properties being sold by a realtor be marketed and advertised honestly and accurately.
You will need a lawyer if you plan to pursue charges. You would also need to prove that you are indeed a victim of false advertising and that it has done damage to you.
This could be an uphill battle legally, especially with proving that your seller lied about getting multiple offers on the property. If your seller still sells it at the right property value but still lied about getting multiple offers, you might not have a strong case.
But if your seller lies about legal documents of the property and undisclosed structural damage that could potentially harm your family, you could have a case in court.
How to know if a seller [real estate agent] is lying?
There are several telltale signs that, if you are careful, you can observe among real estate agents to know if they are lying or telling the truth. The following are some of the most common examples that buyers should be on the lookout for.
Misleading Property Descriptions
This one is pretty obvious. If the listings that you saw online or in an ad do not look identical to the present condition of the property, then this could conclude as misleading and even false advertising for the property.
Immediately discuss with the agent why the listing is different from the property's actual condition. It will be at your discretion if you opt to walk out of the deal or possibly negotiate a lower price for the property.
Agents could also use flowery words to describe the property in order to attract more potential buyers. And what's worse is they have not even checked or inspected the property personally and have only relied on tax assessments. Avoid these agents.
Out-of-proportion Property Markups
Agents do not only lie to buyers, but they might also lie to property owners asking for help to sell their place. Some agents could tell their clients to mark up their property high even though it shouldn't be.
A quick get around to this is by comparing similar listings or purchases in the past couple of months around your area with a similar description to your property.
We all want to get the highest value possible when selling property. But marking it up too high can cause the property to not be sold immediately or not sold at all. That's why the proper property markup is crucial.
Lying About Other Buyers
This is what we talked about earlier, agents creating imaginary buyers. And since they are not obligated to disclose such, it could be very tricky to identify if they are actually telling the truth or just bluffing about having multiple offers.
What you can do is wait. You can hold for a few months if you are suspecting of being lied to by your agent. If the property is still available, try negotiating a favorable price for the property.
A Quick Recap Of What We Have Discussed
It is not uncommon to encounter sellers lying that they are getting multiple offers from other potential buyers to persuade you to purchase the property.
This tactic is often used for properties that are not "hot-sellers." While unethical, there is no law that explicitly prohibits this kind of practice in the real estate business.
We hope that you learned something from this post. Are you interested to learn more about other renting-related stuff? Check out some of our previously written articles below.
Does An Apartment Complex Have To Replace The Carpet? [And How Often]
Can Duplex Be Sold Separately [And How To Separate It Into Two Properties]?
