Final answer:
The term for when an agent makes exaggerated, non-factual statements about a property is called puffing. Puffing is allowed to a certain extent, whereas misrepresentation, which involves false factual claims, is illegal. Consumers are advised to be cautious and verify information based on the principle of caveat emptor.
Step-by-step explanation:
When an agent makes statements that are exaggerated or use embellishment to highlight the positive attributes of a property without being factually false, this is known as puffing. Puffing may include subjective opinions, such as stating that a home is the most beautiful in the area or that it has the best view, which are not easily quantifiable or verifiable. However, if an agent veers into making false factual claims, this becomes misrepresentation, which is against the law.
The Federal Trade Commission (FTC) monitors advertising practices and checks that factual claims about a product's performance are accurate. While puffing is tolerated to an extent in advertising, outright lies or false facts are not permitted. The principle of caveat emptor, meaning 'let the buyer beware,' suggests that consumers should verify information and be cautious when considering advertising claims.