False Advertising!:Consumer Protection Act, 2002, Part III, “Unfair Practices” includes Sub-Section 14
False Advertising!Consumer Protection Act, 2002, Part III, “Unfair Practices” includes Sub-Section 14
I can’t prove it, nor can I do anything about it, but some recent “questionable” practices within our industry have left me frustrated beyond belief!
As usual, I have to change the names, numbers, and streets, but here is a story that will shed some light on how things should work when your seller turns down an offer that is over the asking price…
Allow me to put the following story into perspective…
You’re shopping at Holt Renfrew for socks. Wait, scratch that. You’re shopping at Winners for socks, and you find a super-neat-o set of ankle socks by Nautica for a lean $5.99.
You approach the cash register at the front of the store, and lay the socks on the counter. With a forced smile, the cashier rings in your future footwear and says, “That’ll be $10.16 please.”
A little confused, you ask, “I’m sorry – I thought those were $5.99?”
She replies, “Oh yeah, sorry about that…the tag says $5.99 but they’re actually $8.99. So yeah, that’ll be $10.16.”
This can’t happen, can it?
No, of course not. Because if it did, that would be a good example of a little thing called “False Advertising.”
In the Consumer Protection Act, 2002, Part III, “Unfair Practices” includes Sub-Section 14 which deals with false, misleading, or deceptive representations. Here is an example straight from The Act:
“….a representation that the goods or services are available for purchase at a specific price, when they are not.”
It’s clearly a misrepresentation if you offer a product at a given price, and then refuse to accept that price.
There are conceivably thousands of ways where prices could be misleading or misrepresented; with varying levels of “deception.”
I was once asked by a client, “How can you list a house at $399,000 and get away with it when you know it’s worth $450,000 and you’re just trying to get $480,000 for it by listing it that low?”
My honest-to-gosh answer is: “Eeek…I don’t know.”
When you hold an “offer date,” it becomes somewhat of an exception to the rule.
If there was no offer date, and you offered the sellers $399,000 and they turned it down, then we get into a massive grey area.
The Real Estate and Business Brokers Act, 2002 falls under the umbrella of the Competition Act, 1985, and as such, the real estate industry is generally monitored by the Competition Bureau and everything we do falls under The Act.
When it comes to “false advertising” in the real estate industry as it pertains to pricing, the most common example would be turning down MORE than the asking-price in a multiple offer scenario, and then subsequently re-listing the property at a price which is less than the original offer that was turned down.
As an example, if you list your property at $399,000, hoping for a windfall and $475,000, and you “only” receive three offers and a high of $450,000, you can’t turn around and try your luck again next week at $399,000. In fact, you have to re-list the property at a price that is greater than that $450,000 offer that you turned down.
Think about it: if you turned down $450,000, and you re-listed at $399,000, this would be considered false advertising since you have no intention of selling the property for that $399,000 price. Empirical evidence shows that you already turned down more!
But since REBBA falls under the Competition Act, this is actually issue of anti-competitive behaviour, and not false advertising. Well, let me clarify – this IS false advertising, but legally this falls under the jurisdiction of the Competition Act, and thus it’s deemed to be viewed as anti-competitive behaviour.
Creating a Tax-Deductible Canadian Mortgage- Investment PerspectiveHere is what happened to me last weekend…
There was a house listed in the west end for $599,000 back in December, and they were set to review offers on December 12th.
On December 13th, I called the listing brokerage and the receptionist informed me that the property had been taken off the market.
Fast-forward to January, and the property comes back out at $599,000.
My alarm bell went off and I said, “Hold the phone – they can’t do that, it’s anti-competitive; it’s false advertising.”
Technically, I’m right. The seller looked at offers and clearly decided that the money wasn’t good enough and it wasn’t the right time of year, so they rejected all the offers and took the house off the market.
But this is where we get into a serious grey area.
The reason this action is deemed to be “anti-competitive” is because you can’t offer a product or service to one person and not another at the same price, terms, and conditions.
But what if the seller were to say, “The December offers were conditional on financing, and the offer we accepted in January wasn’t.”? Well according to the Competition Act, this would NOT be deemed anti-competitive. The product/service (in this case, the offer) has to be exactly the same in both cases.
The house that was listed at $599k ended up selling for a ridiculously way high, and I was made to feel like a loser for “only” bringing a mere 114% of the list price as per buyers range.
But did we bring such a “low” offer because the house was listed so artificially low in the first place? That’s a topic for another day.
But I was miffed because I know that the seller and the agent reviewed offers in December and turned them all down, and then had the gall to bring the property back out at the same price in January!
The unfortunate reality is that the anti-competitive actions are almost impossible to enforce.
How are you (in this case the Competition Bureau under instruction from an anonymous complainant) going to prove what offers and terms were presented and rejected back in December? How do you can access to that information?
I don’t think you can. And if you could serve the listing agent with a court order to provide a copy of all the offers that were reviewed, and then get sworn affidavits from the cooperating agents, would you really want to waste the resources?
I don’t believe there is much enforcement to this “rule,” but I could be wrong. That’s why we are real estate practicenors and not masters
I always hold out hope that there will be more accountability among Realtors as we move forward, but when I see actions like this, in addition to about ninety-nine other things that piss me off on a daily basis, it makes me realize that about 25,000 of the 28,000 Realtors in the GTA simply don’t care about the “rules”…sorry friends you know what I am pointing at.
If you have any questions/suggestion or require more information, please do not hesitate to contact me and I will be happy to assist you.
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