Puffing vs. Fraud

Here’s an interesting little passage from Real Estate License Exam for Dummies by John A. Yoegel, PhD, DREI:

"This is the prettiest house on the street." When you, the seller’s agent, say that to a prospective buyer, they realize you’re giving them your opinion. They can also quite easily check it out for themselves. What you’ve just done is puff the property. Puffing is exaggerating the virtues of benefits of a property. It isn’t illegal, and it’s done all the time.

On the other hand, if you say property values are going to go up 10 percent a year for the next few years, you seem to be stating a fact, but the buyer has no way to check it out, because no one can predict the future. As the agent, you’re perceived to be the expert and customers have every reason to believe you. However, if you’re wrong, you could be in trouble. Worse yet is an outright false statement that you know is wrong. "No, sir, there are no plans to extend the six lane road past your house." In the courts, which is where you may end up, your actions in either of these examples can be interpreted as fraud or an intentional misrepresentation to sell the property.

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