How Advertising Restrictions Apply to Real Estate

Instructor: Racquel Fulton
When an advertisement showcases a home for sale, words that may help secure a sale may be restricted under the law. Learn what can and cannot be included in real estate ads.

Introduction

Brooke is a new real estate agent and is excited to market her first listing. A listing is a property that a real estate professional is hired to sell. The property is located in an up and coming neighborhood and needs many repairs. Brooke must get the attention of homebuyers without misleading them about the property's condition and location. In this lesson, you will learn how advertising restrictions apply to real estate.

Listing Contracts

When a property owner hires a real estate agent or broker to sell their home, they will establish an agreement called a listing contract. Listing contracts contain the address and description of the property, sales price, and conditions of the sale. The conditions within a contract are customarily requested by the seller, such as a property will be sold in 'as is' condition or that the sale must be finalized within 30 days after an offer is approved.

Details from the listing contract will be used to create sales material. Sales material is anything published to help generate a sale. In real estate, this includes but is not limited to brochures, postcards, videos, emails, and print and digital advertisements.

Preparing Real Estate Advertisements

When preparing sale material, real estate agents and brokers are required to comply with several laws. One of the most important laws is the Fair Housing Act. The U.S. Department of Housing and Urban Development (HUD) oversees the law and restricts property owners and agents from discriminating when renting or selling single family and owner occupied property. The act also regulates what words cannot be published in advertisements.

Going back to our example, the first draft of Brooke's ad states:

House for sale in a traditional neighborhood. Perfect home for a newlywed couple or family with no more than two children. Close to major transportation and Chinese community with lots of restaurants, temples, and churches. Property needs tender loving care. Owner willing to consider offers below the asking price. Bring all offers!

This ad would violate the Federal Housing Act for the following reasons:

Location

Referring to the neighborhood as 'traditional' indicates that the neighborhood is for a specific race or class of people.

Family Status

Suggestions based on the number of family members such as '2 children' or 'newlyweds' denotes that a preference is given to people within a specific age range or family status.

Race and Origin

References to demographics and race such as that the home is near a Chinese neighborhood is unlawful. All references to race are illegal.

As an example: If Chinatown is publicly known as the name of a neighborhood an ad can state: 'Located near Chinatown' but must not specifically state any ethnic group.

Religion

Stating that property is located near temples and churches may indicate that a religious preference will be given. Preferences based on religious association is also illegal.

State of Property and Descriptions

The ad is misleading about the condition of the property and could lead to legal problems for the seller. The seller may not want to commit to make any repairs.

To prevent any legal problems, Brooke revises the ad:

3 bedroom home located in quiet neighborhood. Close to major transportation and shopping centers. Property needs repairs and is priced to sell.

This ad would not violate the Fair Housing Act. The ad lists the number of bedrooms but does not imply that a specific number of children or family members should live in the home. The ad does not mislead about the neighborhood and there isn't any false information relating to the condition of the property.

Uniform Standards for Real Estate Ads

To create uniform standards in real estate advertisements, the Federal Housing Act instituted the Equal Housing Opportunity policy and logo. The logo should be published in ads to signify that a property is available for sale in accordance with the policy's standards.

Equal Housing Logo

A copy of the Federal Housing Act as it relates to advertisements can be found here: http://www.hud.gov/offices/fheo/library/part109.pdf

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