Claims of Guaranteed Savings

Dear Shannon: I am a passionate broker with a focus on helping buyers. I’m also an outstanding negotiator, and, almost every time when I represent buyers, I can get their offer accepted below list price. When I market my services, I advertise this guarantee of savings and encourage buyers to purchase with representation. My slogan is “Guaranteed Savings! Don’t Purchase Without Representation!”

I had a buyer, who found me through this marketing, file an ethics complaint against me because a seller wouldn’t accept a below list price offer. I explained to the buyer that this seller was able to spend most of their time at their vacation home, so they were well positioned to hold out for a full price offer. I told the buyer there was really no point in offering anything other than the full list price,  but I was happy to continue showing them other properties. The buyer wasn’t interested in other properties and decided to make a full price offer which was accepted. The buyer said they were pleased with the service I provided, so I was surprised when they filed a complaint against me claiming that my “guaranteed savings” was an exaggeration.

At the professional standards hearing I explained to the panel that I am able to expertly negotiate purchase and sales agreements on behalf of my buyers and, in many occasions, my buyers pay less – often substantially less than buyers who deal directly with listing brokers. Savings are the norm for my buyers, but naturally, it doesn’t happen in every instance, especially when a seller is determined to hold out for a full-price offer. Also, I reminded the panel that I offered to show the buyer other properties. I’m confident if we had looked long enough, I would have found them a bargain. 

I can’t control the outcome of every negotiation, so from time to time my buyers make full price offers.  The buyer seemed to understand this was one of those times. I’m still unclear how this happened. The buyer was pleased with the service I provided, they understood the seller would not take less than full price (which I could not control), but I was found in violation of Article 1 of the Code of Ethics as interpreted by Standard of Practice 1-4, just because there was no savings on price for this particular deal. I’m just a little unclear.

Dear Unclear: Thank you for reaching out on this. Sounds like you understand that your “guaranteed savings” slogan promises more than you can realistically provide. But because the buyer understood that the seller was unwilling to accept anything less than list price, and you were willing to continue showing the buyer other properties until you found them a bargain, you are still a little unclear about why this is an issue. Let’s see what the Code says about this.

Article 1 says: When representing a buyer, seller, landlord, tenant, or other client as an agent, Realtors® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary,but it does not relieve Realtors® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, Realtors® remain obligated to treat all parties honestly. (Amended 1/01)

Your practice focuses on representing buyers, and you are passionate about negotiating savings for them. Article 1 requires you to promote the interests of your client, and it sounds like that is what you strive to do. Article 1 also requires you to treat all parties honestly.  Here is the potential issue with your slogan.

Let’s see if we can find a Standard of Practice more on point. Remember, Standards of Practice (SOP) serve to clarify the ethical obligations imposed by the various Articles. 

Standard of Practice 1-4 says: Realtors®, when seeking to become a buyer/tenant representative, shall not mislead buyers or tenants as to savings or other benefits that might be realized through use of the Realtor®’s services. (Amended 1/93)

In your marketing, you seek to become a buyer’s representative. And because of your expertise in negotiating, your slogan states: “Guaranteed Savings!” To guarantee something is to provide assurances that something will happen. Yet, you’ve admitted that savings is not possible for every buyer in every instance because, naturally, you cannot control every seller. Thus, even though you are an expert in negotiation, you are unable to ensure savings on every deal. At a minimum, this is misleading.  SOP 1-4 goes on to prohibit you from misleading buyers specifically as to savings that might be realized through use of your services. Your slogan “Guaranteed Savings! Don’t Purchase Without Representation!” seeks to gain buyer representation and specifically misleads as to a guarantee of savings. This is prohibited by the plain language of SOP 1-4.

In conclusion, you are doing the right thing by using your expertise in negotiation to try to save your buyers on their purchase contracts. You may want to consider making a modification to your marketing so the language isn’t misleading as to a guarantee of such savings. Consider this violation of the code of ethics a way to help hone your marketing. It’s meant to be education for members about their professional obligations. Thank you for sharing your situation so that this can help educate other Realtors.

Based on Case #1-23: Claims of Guaranteed Savings. Other laws and rules apply.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services

Note: Advice deemed accurate on date of publication

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