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Friday, June 11, 2010

Deceptive Real Estate Advertising

Most real estate agents are very good and ethical. But, as with society as a whole, there are unfortunate exceptions. So please consider this a free public service announcement.

As a potential buyer or seller it is difficult to sort out the truth. Here are a few examples that may help the unsuspecting see through the rhetorical, to distinguish fact from fiction:

The Pitch: (in a recent mailer): “Are you think of selling? Do you want to get the highest possible price? (We) have closed more homes at a RECORD PRICE than any other (insert qualifiers here, like ‘all other agents in the county and for sure those who work as a team, particularly with their spouse, and especially on Tuesdays during an election year’).”

The Reality: “We are returning to this market after a four year absence, during which time the closest we came to a home seller was when our incoming moving truck accidentally backed over their yard sign.”

The Pitch: “We will complete your short sale at no cost to you!”

The Reality: Uh, it’s a short sale, meaning that the sale proceeds will be less than the amount owned on their loan(s). If the seller’s lender approves the sale, there are no costs to the seller. It’s SHORT. The lender is eating it! What remains unsaid, of course, is that the seller just lost their home, their credit for the foreseeable future, and whatever equity they once may have had. No cost?

The Pitch: A major franchise announces a very special, exclusive, limited-time program. “Missed the home buyer tax credit? Now there’s an even better Buyer Bonus! Get up to a $10,000 credit back at closing.”

The Reality: This ”credit” is subject to a seller participating in the program. Many are not. Then there is the fine print. “Any pricing decision is in the seller’s sole discretion and is subject to negotiation between the seller and the buyer.” Woo hoo!! Wait a minute. I got the credit, but they raised their price by an equal amount. Bummer. So I guess we are back to negotiating again. That’s so yesterday.

The Pitch: “Interest Rates are rising. A 1/2% increase can result in the loss of $50,000. Don’t wait to Sell!”

The Reality: I have seen this ad on and off for months, until the agent realized that rates had actually come down. If an ad sounds like a scare tactic, you have every right to question the motives of the agent promoting it.

The Pitch: “We have buyers! If you are thinking of selling, call us first!”

The Reality: It’s an old tactic to try to get in the door of an unsuspecting owner and score a listing. In some cases, the agent when called off this ad will tell the owner that he/she must first sign a listing agreement, and then they will bring the buyer by to see the home. Don’t buy this line. If they are really working with a buyer who might be interested in your home, most agents will be happy to simply have a Single Party Compensation Agreement signed by the seller, with the buyer’s name identified on the form. If they ask for more, tell them to take a hike.

The Pitch: “We have buyers for ALL neighborhoods!”

The Reality: Oh, please!

Unfortunately, there are many more examples of deceptive advertising. It’s OK for any agent to make a claim as long as they can back it up with facts. When interviewing an agent ask them to produce those facts — from the MLS, such as actual recent sales representing both buyers and sellers, or in the case of the busy buyer’s agent, the names of the buyers they claim to be working with. Agents using scare tactics might be delivering the truth — or not. And agents making grandiose, unsubstantiated claims might be able to substantiate them — or not. What’s important is that if you suspect you are being snookered, do your due diligence. And if it sounds too good to be true or just smacks of desperation, it usually is.

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