Real Estate Broker Liability for Representations Made Regarding Property Value

by Kurt Schafers

When a seller of a property makes representations of the property’s value, a buyer typically discounts those statements knowing that the seller has an interest in puffing up the value of his or her property. However, under Illinois law the situation is different if a buyer’s real estate broker makes representations of value which are relied upon by the buyer.

“Statements as to the value of property, particularly statements made by the seller, are often treated as mere expressions of opinion and if so intended and understood, fraud may not be predicated thereon.” Duhl v. Nash Realty Inc., 102 Ill. App. 3d 483, 489 (Ill. App. 1 Dist. 1981). “However, where the representation as to value is not a mere expression of opinion but is made as a statement of fact for the listener to rely upon, the representation is treated as a statement of fact and the speaker is bound thereby.” Id.

In Duhl, 102 Ill. App. 3d at 490, the court determined that the representations of value made by a broker could be found to have been meant by the parties to be understood as statements of fact to be relied upon, rather than as expressions of mere opinion to be accepted solely as such. Therefore, the court concluded that the plaintiffs stated a claim for fraudulent misrepresentation. Id.; see also Costello v. Grundon, 651 F.3d 614, 639 (7th Cir. 2011) (“Factors to be considered in determining whether a plaintiff reasonably relied on an opinion as though it were a statement of fact include ‘the access of the parties to outside information,’ the parties’ relative sophistication, and whether ‘the speaker has held himself out as having special knowledge.’”).

The reasoning behind this rule makes sense when one considers the role of real estate brokers. As stated by the Illinois Court of Appeals:

The public is entitled to and does rely on the expertise of real estate brokers in the purchase and sale of its homes. Therefore there is a duty on the part of real estate brokers to be accurate and knowledgeable concerning the product they are in the business of selling that is, homes and other types of real estate. Courts have held in many cases that purchasers are entitled to rely on real estate brokers’ statements.

Lyons v. Christ Episcopal Church, 71 Ill. App. 3d 257, 264 (Ill. App. 5 Dist. 1979).

If you have suffered damages as a result of reliance on a real estate broker’s representations regarding property value, contact the attorneys at Cosgrove Law Group, LLC.