Question

The Lemps have been looking at new homes for weeks and have not found anything worthy of an offer. Mikel, their agent, has invested a large amount of time in showing homes with no luck. Today, he calls Mr. Lemp and says, "I have found you the perfect home! The home is amazing! The yard is perfect and lush. The school district is the best in the state. This home and area are the most prestigious in the city!" Are these types of statements legal?

A) No, this is intentional misrepresentation and cannot be substantiated.
B) Yes, this is legal as long as Mikel does not violate the Federal Fair Housing Laws. These statements are considered "Puffing" in the real estate world. "Puffing" can be unethical if the statements are not true, but it is not illegal.
C) No, this is unintentional misrepresentation. By exaggerating, Mikel is making promises about the property and surrounding areas that are purely subjective.
D) No, this is merely good salesmanship. Describing a home and the surrounding area in glowing terms is just that and nothing more.

Answer 1

Real estate agent Mikel's enthusiastic statements about a home are legally allowed under what is known as puffing, as long as no factual claims are false. Puffing is part of salesmanship, permitted to a degree by the FTC, and becomes illegal only if it involves untrue factual claims. Buyers are advised to be aware and verify information ('Caveat emptor'). The correct option is B.

Step-by-step explanation:

The statements made by Mikel to the Lemps about the perfect home fall under a common practice in the real estate industry known as "puffing." This involves using subjective, exaggerated language that is optimistic or complimentary. According to the Federal Trade Commission (FTC), exaggeration in advertising is permitted to some extent, as long as it does not involve presenting untrue facts as claims.

Puffing is legally allowed and is considered part of salesmanship, but it crosses into illegal activity if specific claims made are false and cannot be substantiated. This means that as long as Mikel is not violating any specific facts, such as falsely claiming the school district is officially rated the best in the state when it is not, his statements would generally be within legal bounds.

However, statements like "most prestigious" are subjective opinions and therefore not considered factual claims. Caveat emptor, or "let the buyer beware," applies in this situation, which implies that while the agent may use puffery, the buyer should still do their due diligence.