Hyperbole in real estate advertising is nothing new, but one Chicago brokerage alleges its biggest independent rival has crossed a line.
@properties, one of the top 20 largest brokerages in the country, has filed a lawsuit against fellow Chicago-based indie brokerage Baird & Warner, accusing the firm of inflating its sales numbers and thereby misleading consumers.
The two firms are among the top three in the Chicago area by both sales volume and transaction sides with NRT’s Coldwell Banker leading the pack, followed by @properties and then B&W, according to Real Trends’ Steve Murray, who noted the three are “fierce competitors.”
This is undisputed: Baird & Warner is claiming to have completed “$8.8 billion in sales” and “32,000 transactions” in 2017 in its online ads and a blog post. But in a complaint filed March 19, @properties said that, according to data from local MLS MRED, Baird & Warner completed $5.66 billion in sales volume and 17,168 transactions in 2017 — nowhere near what the firm claimed in its ads.
However, B&W counters that it arrived at these sales figures by including in its criteria mortgage, title and rental transactions in addition to residential real estate sales.
In an emailed statement, @properties’ attorney, Aaron H. Stanton of Burke, Warren, MacKay & Serritella, P.C., said, “@properties brought the lawsuit based on the fact that it has worked hard to establish the leading position in the local Chicago marketplace and is committed to defending that position against false and misleading claims.
“Cooperation among brokerage firms is at the core of the real estate business, and in the spirit of cooperation, @properties expects all firms to be held to – and to hold themselves to – reasonable standards for truth in advertising. Violating these standards by overstating sales figures and making false claims is harmful to the firms that play by the rules, like @properties. More importantly, it is harmful to consumers and to the brokerage industry as a whole. And @properties will pursue all remedies against such dishonest and injurious practices.”
The complaint alleges Baird & Warner violated federal and state laws against false advertising and asks a federal court to order the firm to destroy the ads and publish a retraction of the “false or misleading statements” made in the ads because they “are likely to divert potential @properties clients to B&W and likely to divert potential employees of @properties to B&W.”
Semantics or false advertising?
In an emailed company statement, Baird & Warner said its sales figures included not only its residential sales but also transactions made through its title and mortgage companies and rentals.
“Baird & Warner prides itself in the truth and accuracy of its advertising, promoting its full-service real estate capabilities and the success of its residential sales division, as well as its wholly-owned title and mortgage companies. In 2017, Baird & Warner’s residential sales, title and mortgage companies did $8.8 billion in sales and more than 32,000 transactions combined,” the company said.
Baird & Warner also took exception to the complaint’s allegation that the sales and transaction statements made in its ads would encourage @properties agents to jump ship to B&W. “Our broker associate movement data does not support this claim from @properties,” the company said.
According to Stanton, @properties asked B&W to back up its claims before filing suit and found out B&W was including rentals, mortgage and title transactions, and “off-market” (non-MLS) sales in its sales figures.
“This was problematic because B&W is advertising $8.8B ‘in sales.’ Obviously, ‘sales’ means real estate sales, which does not include rentals or mortgage and title transactions, which do not constitute sales of real estate,” Stanton said.
“Adding these numbers to inflate the sales number is false advertising. With respect to off-market transactions, when asked for the amount, B&W refused. Because B&W clearly did not have $2.5B in off-market sales, this number cannot support the $8.8B. When B&W refused to retract and/or cease running this $8.8B in sales campaign, @properties filed suit.”
Asked for comment on @properties’ statement, a spokesperson for Baird & Warner said the firm had “no further comment on pending litigation.”
@properties has 2,350 agents and is the 18th largest brokerage in the nation by transaction sides and the 11th largest by sales volume, according to Real Trends. Baird & Warner has nearly 2,400 agents and is the 21st largest brokerage in the U.S. by transaction sides and the 22nd largest by sales volume.
Here are their 2017 production numbers, according to Real Trends:
Baird & Warner
Real Trends figures include only residential sales (no rentals), both on and off the MLS, Murray said. When a brokerage does both sides of a deal, the property is counted twice for both transaction sides and sales volume.
MRED declined to comment for this story.