10.22 Misrepresentation vs. Puffing
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The Company recognizes that sales-speak (puffing) is a common practice within the real estate industry. When using sales-speak (puffing), Associates should never misrepresent the facts. In many ways the distinction between a misrepresentation and puffing is a very fine one. Puffing should be considered "sales-speak" that is intended to induce interest, but is not necessarily a fact that a reasonable person would rely upon.
Examples of "puffing" would be as follows:
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Our real estate company is the best in town.
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This house is the best buy in the city.
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This house is simply beautiful.
However, there is a point at which the line is crossed from "puffing" to outright misrepresentation. An outright misrepresentation is a false representation by a licensee made with knowledge of its falsity or by making a representation without a reasonable basis for believing the truth of the statement. The usual standard a court applies to make the distinction is whether a reasonable person would have relied upon the statement to make a decision. The closer the statement made by the licensee moves from "opinion" to “statement of fact”, the more likely a reasonable person will have relied upon the statement of the licensee to make a decision.
A classic example of puffing occurs in listing situations where a licensee tells a potential seller that he or she has a "buyer for the property". When a licensee merely has a buyer whom he believes would be willing to look at the property, but leads the seller to believe that he has a buyer who is ready, willing, and able to buy the seller’s property at the suggested listed price, that licensee has engaged in misrepresentation. The specific intent of inducing the seller into a listing contract by dangling an alleged quick sale is unethical. If the licensee would have said "our company works with many buyers (or we have a few buyer customers/clients) who would appreciate this property and possibly purchase it", this would be puffing, as it does not misrepresent the actual status and interest of those potential buyers. Once a licensee moves beyond "puffing" to leading the seller to believe that an actual buyer exists who will make an offer on the property as soon as it is listed, that statement becomes a misrepresentation.
