Examining the Transparency of Real Estate Marketing Claims
Real estate in the Greater Toronto Area (GTA) has been in a seller's market for most of the last decade.
With housing supply and affordability dominating headlines and political discussions, it's no secret that prices have skyrocketed to historic highs in recent years. Add a chronic shortage of supply and a construction industry struggling to keep up with demand, and we have the perfect storm for fierce buyer competition on the few homes that do hit the market.
This issue may strike a nerve with some agents and consumers alike. However, meaningful progress on contentious topics requires open dialogue. Today, let’s examine the ethics of "sold over asking" claims and whether they truly serve the best interests of the public.
The Market Reality: Pricing Strategies and Buyer Behavior
A common strategy for many real estate agents in this competitive market has been to list properties at prices well below recent comparable sales. This tactic, especially for homes under one million dollars, often includes a fixed date for offer submissions, creating the expectation of multiple, and often unconditional, offers significantly above the list price.
If agents were to list properties closer to their expected selling price, those listings might appear overpriced compared to others that are underpriced. This could result in fewer showings and reduced chances of multiple offers, which sellers (and their agents) typically seek.
The result? Homes frequently sell for amounts far exceeding their initial list prices. It’s at this point that many agents display “sold over asking” signage, post social media claims, and run advertisements touting the sale.
Are "Sold Over Asking" Claims Legitimate?
In some cases, yes. For example:
A property priced in line with recent comparable sales that ultimately sells for more than its list price could justifiably carry the "sold over asking" claim. This scenario is more common for higher-priced properties or unique listings, such as farms or large vacant parcels of land, where fixed offer dates are uncommon.
However, in many cases, these claims can be misleading:
Underpricing as a Strategy:
When an agent intentionally lists a property well below its market value to attract multiple offers, the "asking" price is no longer a true representation of the seller’s expectations. Claiming the property sold “over asking” disregards the context of the pricing strategy.
Price Adjustments and Re-Listings:
Listings that were initially priced higher, terminated, and then re-listed at a lower price before selling are another common scenario. Highlighting that the property sold above the re-listed price is disingenuous if the final selling price aligns with comparable sales.
Embellished Claims:
Custom signs bragging "SOLD $100K ABOVE ASKING!" or "SOLD 15% ABOVE ASKING!" add unnecessary emphasis. These statements can mislead consumers, especially when the final price simply matches market comparables.
A Call for Transparent Marketing
It’s time for the real estate industry to adopt a more transparent approach when marketing sold listings. While most agents don’t intentionally aim to mislead, the language and methods used can distort the reality of the transaction for the public.
A more appropriate alternative would be to:
Simply use the word “sold” without qualifiers.
Provide comparisons to recent sales with clear explanations of how the outcome exceeded expectations or market norms.
The Need for Industry Guidelines
To ensure consistency and fairness, organizations like the Ontario Real Estate Association (OREA) or the Real Estate Council of Ontario (RECO) might consider setting formal guidelines on acceptable practices for marketing sold listings. These standards could clarify what is considered ethical and accurate in the context of pricing strategies and sales outcomes.
Ultimately, a shift toward better communication can strengthen trust between real estate professionals and the public, enhancing the industry’s credibility. After all, transparency isn’t just ethical — it’s good business.
