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Real Estate Listing Marketing — What to Watch for to Avoid a Real Estate Lawsuit

It can’t be stressed enough — getting real estate transaction details in writing is so critical when it comes to documenting a client’s home sale or purchase.

Emails, notarized documents, and even text messages (recommended as a last resort) can help to clarify the information you are sharing with a buyer or seller, as well as ward off a real estate lawsuit by covering you with written proof of decisions, disclosures and agreed-upon details.

But what about your real estate listing marketing materials? What if there are errors in information listed to the general public about a property?

Real estate listing marketing materials can be anything from a website to a brochure, sell sheet, flyer, or even just the description on the MLS. Especially because this information is in writing, it’s important to be 100% accurate in order to avoid a real estate lawsuit based on the following:

  • Fraud (intentionally misrepresenting or providing false information)
  • Misrepresentation Regarding the Condition of the Property
  • Consumer Protection Act (depending on the state, a seller’s agent may have a responsibility to check the accuracy of the information provided by the seller)
  • Misrepresentation Regarding Flooding or Leaks
  • Misrepresentation regarding the Value of the Property

Real Estate Listing Omissions and Exclusions

What are some of the most common listing trouble spots?

  • Square Footage. Submitting a listing with the wrong square footage of a home — or materials with conflicting square footage information — has resulted in more than one real estate E&O lawsuit, including Horiike v. Coldwell Banker. In this case, the courts sided with the buyer when the selling agent overstated the home’s square footage in the listing and did not correct or disclose his knowledge of the inaccuracy.
  • Specific Known Issues. Clients can read between the lines and know what it means when a property is a “fixer-upper” or “a diamond in the rough.” The listing may not specifically say that the property needs work, but buyers understand that it’s not move-in ready and may require additional work to bring the property up to a condition they might prefer. However, you must also disclose if there are issues that could impact the home’s value — even in the future — if you’re aware of them. For example, if the home is near a soon-to-be commercial center or highway project that could affect the property’s value, you will need to disclose that. Potential buyers will look to the disclosures to notify them of problems that the owners, and you, are already aware of.

Real Estate Listing Exaggerations and Overstatements

What about “marketing exaggerations” in listings? Like saying the home “has spectacular mountain views” when in fact the mountain is only visible through a top floor window if you stand on your tiptoes and the neighbors cut down their trees. That overstatement could get you into trouble (especially if the view affects the value of the home).

You also can’t say the home is in a “superb school zone” when that particular school district is in fact poorly rated. The words you chose matter. Limiting the listing description and letting the property do the talking can be one way to help you avoid E&O claims.

Real Estate Listing Marketing Rule of Thumb to Avoid a Real Estate Lawsuit

When composing information for listing marketing materials, ask yourself these questions:

  • Do the listing marketing materials accurately describe the home?
  • Are the facts verifiable?
  • Could anyone misinterpret any part of the information?

Claim Prevention and Real Estate Lawsuit Avoidance

If you are in doubt about anything you are putting into your listing marketing materials, always seek legal counsel. As a CRES customer, you can contact our legal advisory service 7 days a week — included with your CRES real estate E&O + ClaimPrevent® policy. Ask these expert real estate attorneys to review the item in question—it’s that simple. We want to see you succeed in your career and avoid a real estate lawsuit. When in doubt, call!

Have you encountered problematic real estate marketing materials? How did you handle it? Tell us in the comments below!

Read more on our ClaimPrevent® Summary: Real Estate Licensee Responsibilities When Creating New Listings

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