Hey all I am taking a course on Real Estate laws. I need to sit in a debate next week and need some help. Here is the question:

What do you think the unethical or illegal activity that agents conduct the most is?

Any thoughts will help. I know what I see in the bpo business but not so much on the sales side.

Here's an e-mail some mental midget sent out to all of the realtors last night in my area. The names have been changed to protect the dumb.


Fraud on The Public From “Impossibly Priced” Short Sales

The MLS service has no rule which prohibits members from listing properties for sale at a price well below that which the listing party (the member of the MLS) knows will be acceptable to the seller. Most of these properties are "short sales" where the listing party knows that the listing price will not be acceptable to the seller’s lender(s).

I believe that such "way below the real price" listings violate Fl Statutes Chapter 475.25 (b) and (c). I believe the advertising of these properties at unrealistically low prices is a "misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device … in a manner which is fraudulent, false, deceptive, or misleading in form or content." I further believe the public in general is misled about the current market price of comparable properties by the false advertising of an artificially low price for such properties. This has the effect of distorting the public's perception of what comparable properties are worth and constitutes a general fraud upon the marketplace which would be prohibited under Fl Statutes Chapter 817.06 if such Statute were held to cover the sale of real property.

Consider a few examples all of which might involve waterfront property: a) list price $10,000 where the Seller owes more than $240,000 and the property appraises above $180,000; b) list price $825,000, Seller owes more than $1.9 million, and the property appraises above $1.5 million and c) list price $975,000, Seller owes in excess of $1.8 million, and the property appraises at $1.8 million. In each case the general marketplace is distorted. Prospective buyers and sellers of other waterfront property are being deceived by the false price publicly advertised on these properties. As result of the deception buyers believe that comparable property is worth LESS than it might otehrwise be. Both clients and agents have significant time wasted due to the false expections created by numbers falsely claimed to be "prices" but which are little more than guesses of what number might generate a string of offers. How is this ethical?

It is my understanding of the laws of the State of Florida that a Seller who publicly advertises an item for sale at a price at which it cannot be obtained from that Seller has committed fraud by virtue of false advertising. The same standard should be applied to real estate.

I am of the belief that it is the absence of any prohibition against offering a property for sale at a price which is known by the listing agent to be unacceptable to either the Seller of the property or to parties who hold a mortgage lien on the property which creates the unethical, abusive, and potentially illegal behavior. A rule which required Sellers to publicly acknowledge when the listed price of a property is less than the then current amount of any and all mortgage liens thereon and to either indicate Seller’s willingness to make up the shortfall or approval of the lenders of a lesser list price would prevent the abuses of current practice. At a minimum listing prices which are unapproved by the Seller’s lenders should be treated as the equivalent of a suggested opening bid in an auction and not be falsely labeled as a “price.” Price is a quantity at which something can be purchased not a quantity which is known to serve only as an opening volley for back and forth negotiations. We do not allow auctioneers to list property at $1. The short sale practice above is little different.

I have referred this matter to the Attorney General’s office seeking for both the Attorney General and the Florida Real Estate Commission to publicly state that the practice of offering a property for sale at a price which is known by the listing agent to be unacceptable to either the Seller of the property or to parties who hold a mortgage lien on the property constitutes a prohibited advertising practice under Chapter 475.25 (c).

"PUFFING" aka Puffery

Puffery is the most frequent.

1: Steering clients to "better areas, more desirable areas".

2: Withholding facts that as an agent you have knowledge to. (I do many a bpo and deal with many a out ot state investors I have to report the facst to; like it ir not). I, as an agent, is your eyes and ears in my market. Trust me or somebocy else, do not beat me up becaue you do not like my opinion.

I know I am way late on this, but I will give my opinion anyway...
I think the most common thing is failure to disclose. Whether it's failing to disclose agency relationships to customers, failing to disclose that the agent is either the seller, buyer or has some interest in the property/transaction, or failure to disclose adverse material defects. There seems to be an attitude in our industry of it being wrong to lie, but okay to omit information that is not only legally required, but ethical.