How I sold a house for more money because it had bugs

ant-macro-insect-red-40825Back in 2015, I received a call from a client informing me that we should be expecting an offer from the couple who had just toured his home.

My immediate response was, “That’s great! I didn’t see the feedback email come across.”

To which he responded, “There wasn’t an email. I bugged the house, and they discussed making a full-price offer.”

My client continued to tell me that an attorney he’d spoken with stated that recording conversations within your own home was a gray area in the state of Ohio.

I wasn’t sure how to respond to this news and wasn’t even sure if I had an obligation to disclose this situation to anyone. But before I had time to let the details sink in, we did receive an offer — albeit $20,000 below asking price.

In nearly every other negotiation, I would have countered with some reduction in price. But because of the intel that my client had obtained, we held firm to our asking price. We went under contract within 12 hours.

Thanks to the information collected by the listening devices throughout the home, my client put himself in a position of strength during negotiations and sold his house for more money than we both had anticipated.

Benefits of bugging

As we all have seen on HGTV, placing hidden cameras and allowing a homeowner to see how the general public views their house is an eye-opening experience for sellers.

Hidden cameras provide significantly more detail and insight into how a home can (or should) be improved to achieve mass market appeal.

Every agent has dealt with a seller who couldn’t comprehend a buyer not liking their “decoupage counter tops” or primary-color-painted walls throughout the home. And just like teenagers who don’t want to listen to their parents, some sellers need to hear the same feedback you’ve already given them from a “real buyer” before it sinks in.

Another benefit of recording a walk through is that the feedback is immediate — not counting the time spent exporting and splicing together the entire walk through. Most agents are great at timely feedback, but for many others it’s like pulling teeth to get a response.

And once a response is provided, it could be as vague as “not interested” or “buyers chose another house.” This does nothing to help you or your clients get the home sold.

There aren’t enough agents (at least in my market) who provide helpful feedback. Recommended price adjustments, staging advice or simply knowing what’s unappealing to buyers is crucial to positioning the home to properly sell.

But just because this manner of collecting feedback is efficient, that doesn’t make it legal.

Could the bugs come back to bite me?

Let me preface this by stating that I am not a lawyer. What is legal versus illegal when it comes to recording other people without their knowledge varies from state to state. You should consult an attorney with specific questions before you (or your clients) do anything along these lines.

I will do my best to give you a general summary in layman’s terms of the issues behind bugging your home during showings.

To understand why recording inside a home is a gray area, we have to dig deeper into public versus private property and how consent works.

Private vs. public property

The rules are different for recording what happens in a private setting versus a public setting. Paparazzi exist because anything that happens in public is fair game to record. Whether you’re a celebrity or a random person on the street, you should not have an expectation of privacy.

It would be hard to argue that when an agent shows a home, the property becomes a “public setting” where privacy laws do not apply. In fact, the reason homeowners leave during showings is to give the buyer “privacy” when touring.

On the flip side, property owners have the right to protect their property. Whether that means protecting the possessions inside the home or the condition of the home that’s up for sale. Owners may legally install video cameras throughout their property.

As long as cameras are filming only the owner’s property and are not installed in areas of the home that are intended to be private areas (for example, bathrooms), any video recording done by a homeowner in his or her own house is legal — even without the consent of those being filmed.

But what’s not always legal to record? Audio.

One-party vs. two-party consent

Eavesdropping laws vary from state to state and were designed to protect citizens from illegal wiretapping. Depending on which state you live in, it is illegal to record a private conversation without the consent of at least one party — or possibly all parties — in the conversation.

In a few states, everyone participating in the conversation must consent to a recording — but it’s more common that only one person in a conversation needs to be aware that a recording is taking place.

Although several articles on this topic go deep into which state requires which level of consent, when we’re talking about recording a home showing, it doesn’t matter. You (or the seller) as a necessary consenting party are not there to participate in the conversation.

In other words, if you are conducting a showing in a state that requires only one party to consent, you are free to record your conversation with the buyers as you walk them through the home.

But from what I can find, recording the conversations of other people without anyone’s knowledge or consent in a private setting is illegal, whether or not you live in the home that they’re touring.

(Unfortunately, your dog Rusty — who won’t stop barking in his cage — doesn’t count as a party to the conversation, even though he can be heard on the recording.)

Do I have to exterminate my bugs?

Bugging a home can be done legally. If you directly tell buyers they are being recorded or if you get a release signed in advance, you’re in the clear.

But this would probably turn away every showing, so a more subtle option is to simply post a sign near the entrance stating that listening devices are present within the home.

Should buyers choose to still tour the home, then there is implied consent.

Does posting this disclaimer in the agent remarks of the MLS listing count as sufficient disclosure? That’d be up for a judge to decide.

Is it ethical?

Whether it’s legal or illegal, ethics must be taken into account in wrestling with this topic.

Surprisingly, the National Association of Realtors Code of Ethics does not address recording devices in any way. The closest it comes is Article 1 in regards to honesty being shown to all parties of the transactions:

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.

If during negotiations, your client informed you that they had recorded a conversation, would you feel it necessary to be honest and disclose this fact to the other parties of the transaction?

Post-bug thoughts

With today’s technology, bugging a home is really simple to do and costs practically nothing. A recording device that looks like a USB drive costs only $20 on Amazon.

Sellers may bug their home without even telling the agent, since the likelihood of being caught is slim and the reward — like my client experienced — can be huge. Agents should be very careful about what they say and how they act inside someone’s home, and should also be sure to counsel clients that anything they say could be used against them.

I would love a better solution for gathering feedback than having to hunt down an agent over the phone or relying on the four-email drip that exists today. For now, bugging a house may not be the best solution, but it’s got Legs!

* As previously seen on www.inman.com.

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