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A house in California is for sale with asking price of X .

A buyer engages with an agent and finds out in writing that offers will be accepted until a certain date.

A buyer submits a formal written offer of Y, which is greater than X , prior to the published due date.

On the date the offers are reviewed, no other prospective buyers have submitted an offer.

The sellers refuse to accept responding to the effect of - you were the only buyer but we were hoping for more.

The next day the seller raises the asking price to the level that they wanted to, the new price is Z, which is higher than either X or Y and the offer date is now renewed.

In my view if this were any other good, such behavior would be frowned upon and possibly a bait and switch, but is it illegal?

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    What makes you think the seller could possibly be under any obligation to accept offers?
    – Greendrake
    Jan 26 at 2:06
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    @Greendrake I'm not sure that I think someone is under obligation to accept an offer but specifically asking what legal principle underpins the situation where a price is advertised, a timeline established, and then the offer to sell is withdrawn by the seller and then relisted. To me that seems different than situation when someone places something to sell and solicits offers without a list price. But clearly it is done all the time so the purpose of this question is to understand how or why not to rail against the system
    – crasic
    Jan 26 at 2:39
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    @DavidSchwartz Asking prices are not offers even at supermarkets — they are invitations to treat. All the more so they would hardly ever be offers in real estate.
    – Greendrake
    Jan 26 at 11:54
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    Bait-and-switch tactics are usually made specifically illegal through consumer protection laws. That said, some jurisdictions do mandate that an advertised price is binding - the shop must sell at that price if you can get the product to the checkout before it is updated - even in cases where the price was an error (such as a salesperson putting the discount on all the stock, rather than just the ones their manager want to get rid of cheaply).
    – user4657
    Jan 26 at 21:55
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    @ComicSansSeraphim: In CA law, it is required for such a venture. The posted price in a store becomes the actual price unless it's an obvious error. The law's rather specific and I doubt that law applies to a house.
    – Joshua
    Jan 27 at 4:27

4 Answers 4

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Yes, this is legal, although further explanation is necessary to understand why and to know what facts would result in a different conclusion.

A listing of a property with an offering price is an invitation to make an offer to purchase the property, rather than a true offer in a contract law sense. There is probably fine print at the website where the listing was provided that says so expressly, although this would be the default rule, even if it didn't.

The offer is the full written proposed purchase and sale agreement which contains details beyond the price such as deadlines for closing, financing approval outs, inspection and title defect outs, details as to personal property inclusions, etc.

Only when the full written purchase and sale agreement is signed by both parties or their authorized representatives is there ordinarily contract formation from offer and acceptance, although it is possible to imagine fact patterns that are exceptions to this general rule (e.g. auction sales, exchanges of detailed emails accepting without manual signatures, etc.). Normally, a purchase and sale contract will also include a tender of earnest money in an amount not specified in the listing, although this term is not legally required.

As another answer notes, there is a risk of discrimination liability depending upon the reasons for not accepting the offer made (which is not insubstantial if the seller has any information about the people who are offering to buy the property). This would be largely eliminated, however, if the seller had decided not to sell the property below a given price before having learned anything about the offers that had been made for the property. But this kind of money damages liability, even if possible, would rarely create a specifically enforceable contract to sell the real property.

There could conceivably be consumer protection act type liability, although having looked in the places where a statutory imposition of liability is most likely to be, it doesn't appear that this is illegal under those acts. Also, again, this kind of money damages liability, even if possible, would rarely create a specifically enforceable contract to sell the real property.

The most obvious consumer protection type suit would be to sue for failure to sell something as advertised, which is normally a deceptive trade practice under the California Civil Code § 1770(a)(9). But, sales of residence are exempt from the deceptive trade practices provisions of the California Civil Code. California Civil Code § 1754.

Likewise, this wouldn't be "bait and switch" advertising under California Business and Profession Code § 17500, et seq. and the related regulations (in the case of a "used" home where the decision is made by a non-dealer home seller), because the seller has no intent to sell substitute goods or services, at a higher price, to someone making an offer.

The California Business and Profession Code general provision related to false advertising, unlike the deceptive trade practices provisions of the California Civil Code, does not exclude real estate in general from its scope, and other provisions of that Code actually expressly provides for false advertising liability related to real estate that concerns statements about the real property itself, rather than the price and terms upon which the seller is willing to sell the real property.

It also wouldn't be common law fraud, because, as a matter of law, contrary to any logical arguments to the contrary, the price you are willing to sell something for is not a "fact" which is actionable for being falsely represented. A statement about a price you are willing to accept is never fraudulent as a matter of law (except when a statute provides otherwise). This exclusion exists to prevent fraud liability from arising out of ordinary price negotiations in commercial transactions.

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It is legal, though not if the grounds are illegal discrimination (race, religion, etc), which by their (empirically supported – they raised the price) representation is not the case. As a marketing strategy (pick a low number, hope for a bidding frenzy that drives the price up) it is legal, though carries a non-trivial risk. It does not constitute "bait and switch" under any definition of the term, and it is not illegal to engage in a business practice that causes someone to frown, or otherwise disapprove.

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    Why is advertising a lower price than you would otherwise accept legal for real-estate but not for say, cars, or boats? law.cornell.edu/regulations/california/4-CCR-Sec-1304-1
    – crasic
    Jan 26 at 2:23
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    @crasic Does a private homeowner advertising their house fall under the Home Furnishing Act? I'm having a hard time finding a justification for this.
    – doneal24
    Jan 26 at 3:33
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    It is legal, though not if the grounds are illegal discrimination (race, religion, etc), which by their (empirically supported – they raised the price) representation is not the case. But if they raised the price after discovering the bidder's race? Surely the price raising is capable of being a means for discrimination
    – Chris H
    Jan 26 at 10:10
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    @ChrisH It might be difficult to prove, but if that were indeed the reason they raised the price, I expect the prospective buyer would have a civil rights case. Perhaps they'd need to find character witnesses who know that the seller has a history of prejudice against that class.
    – Barmar
    Jan 26 at 15:36
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    @crasic "Bait and Switch" refers to baiting with one product and switching to another product, not baiting with one price and switching to another price. And there clearly is not legislative intent to make it Failure to have available at all outlets listed in the advertisement sufficient quantities of the product to meet reasonable anticipated demands" be illegal in the case of a house; it would be absurd to expect someone selling a house to have a house available to everyone who wants one. Jan 27 at 3:48
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A buyer engages with an agent and finds out in writing that offers will be accepted until a certain date.

Yes, this tactic is quite common. They were hoping to incite a bidding war with an unpublished minimum bid price.

They failed to attract this but are under no obligation to accept your offer. Imagine if their reasoning was "We gave it more thought and no longer wish to sell, we're sorry for wasting your time in submitting an offer", would you have posted your question?

Had they engaged with your contract by signing it but then tried to renege then there would be legal recourse you could pursue; assuming you could afford it.

As of now it's just bad behavior on the seller's part.

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    It's not even bad behaviour. If a seller was obligated to accept one offer after a fixed timeframe, even if it wasn't for the amount they wanted, I could put in offers of $1 for every property currently on sale in the USA, and statistically it'd be likely that I'd get one of them. Clearly that isn't a practical proposition. The agent would be unhappy about the seller not accepting, but that's all.
    – Graham
    Jan 27 at 13:45
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    @Graham I think the "bad behavior" the answer was referencing was listing an asking price below what the seller really wanted, not refusal to accept the only offer. I don't think any reasonable person would consider refusing a $1 offer on a house to be "bad behavior."
    – reirab
    Jan 27 at 16:50
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    @Graham Being obligated to accepting any offer after a fixed time frame is not the same as being obligated to accept an offer of at least your asking price within a fixed time frame.
    – DKNguyen
    Jan 28 at 1:55
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It is indeed legal, and it is not bait and switch or false advertising as the title of your post illustrates —- the price you are referring to is a starting negotiation price point, not an advertised price, otherwise the offer wouldn’t have been above it.

Bait and switch is for most purposes impossible for houses, buying just doesn’t happen that way. False advertising is certainly possible (new roof 2 years ago or was it 20), but the price that is being asked for isn’t an advertising sales price as it is expected and almost required to be simply the start of negotiations. Do you want the fridge or do you want NOT to have the fridge or do you not care? That’s a few hundred to a few thousand right there.

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