Over the last few decades, the real estate industry has evolved into a rather flashy environment, thanks in large part to the success of several high-profile individuals. Shark Tank mogul Barbara Corcoran, TV doctor Sanjay Gupta, and a variety of social media influencers have helped sensationalize the real estate sector.
While most of the newfound attention has been beneficial for real estate companies around the country, the spotlight has also been shined on some questionable ethical practices. One firm in particular, 72 Sold, recently found itself at the center of one of these ethical debates while immersed in a heated legal battle.
On that note, below is everything you need to know about the 72 Sold lawsuit.
Background on 72 Sold
Real estate consulting agency 72 Sold developed a unique selling proposition that easily captured the attention of many homeowners. Its services focus on selling properties fast, allowing sellers to avoid the drawn-out process of conventional real estate transactions.
Traditional real estate methods involve listing your home with one of the real estate professionals in your market. They will arrange a photography session and advertise your home on a multiple listing service (MLS). In exchange, they’ll typically charge a commission of 4 to 6%, which they usually split with the buyer’s agent.
Initially, 72 Sold promised homeowners a process that would get their properties sold in just 72 hours; it even built its entire branding strategy around that commitment. The thing is, these assurances became the focus of consumer legal challenges, accusing 72 Sold of engaging in misleading advertising practices.
The company’s business practices and advertisements have become far less ambitious since the lawsuit. Their current real estate program claims that the company can sell a home in about eight days. That’s still plenty appealing to people who want to sell fast, as a traditional transaction can take around 108 days, depending on market conditions and location.
Nevertheless, let’s take a closer look at how 72 Sold’s lofty promises led to a legal battle as well as at the significant implications the suit could have on the industry as a whole.
The Allegations Against 72 Sold
The 72 Sold lawsuit primarily revolves around allegations of misleading and deceptive marketing strategies. These accusations are twofold, suggesting that the company’s promises of selling homes within 72 hours were not as straightforward as initially advertised and that its marketing failed to accurately represent the complexity of the sales process.
The firm itself made counterclaims, citing that homeowners could sell their homes at above-average prices by partnering with the company. These claims are still present on the company’s website, as seen in the screenshot above. As such, if you’re currently interested in selling your home and believe you could potentially sell it for anywhere between 7.8 and 12% higher than other properties in your market, partnering with 72 Sold could be very appealing.
Unfortunately, many homeowners who believed these advertisements have found that they are, indeed, too good to be true. Not only did transactions take longer than 72 hours, but offers tended to be lower than expected. Critics also argued that 72 Sold baited consumers by claiming they charged lower fees. In reality, the company’s fees are quite similar to the usual 5 to 6% commission rates charged by traditional real estate agents.
Despite the bevy of allegations, 72 Sold has firmly denied any wrongdoing, maintaining that its promotional practices are transparent and that its claims are backed by accurate data.
Legal Analysis
At the heart of the 72 Sold lawsuit are the consumer protection laws designed to safeguard individuals from deceptive business practices. There are both federal and state consumer protection regulations. And though there are nuances that shift from state to state, the general purpose of these laws is to ensure companies are transparent with consumers.
The plaintiffs in the 72 Sold lawsuit argue that the company violates these protections by failing to provide a complete picture of the home-selling process. Consumers are particularly frustrated with the inaccuracies regarding the timing of the deal and potential challenges of selling a property, such as receiving offers below market value. These misleading advertisements may violate consumer protection laws and open the company up to significant liability.
Typically, plaintiffs in civil suits need to demonstrate that they suffered some harm as a result of the other party’s negligence or intentional omissions. In the case of 72 Sold, plaintiffs are alleging financial harm because they made decisions based on incomplete or inaccurate information.
Impact on 72 Sold Laws
Should the lawsuit move forward, 72 Sold could face serious financial implications, being forced to compensate past sellers for the difference between what they sold their home for and the fair market value of the property at the time of the transaction.
But even in the event that 72 Sold manages to win its case, it will likely spend tens of thousands of dollars on its legal defense. The company has also lost a ton of brand equity throughout the proceedings and may, therefore, find it more difficult to source clients in the future.
Indeed, consumers can be unforgiving when they discover a brand is mistreating them or their peers. Victoria’s Secret, for instance, is still doing damage control from its role in the “Karen” incident, which took place in one of its New Jersey stores in 2021.
Now, 72 Sold might bounce back faster than Victoria’s Secret. But in order to successfully do so, it must make some major changes to its business model to restore trust with consumers. As mentioned above, 72 Sold has already shifted to an 8-day promise rather than the 72-hour guarantee. Its marketing team has also added clarifying language to provide some protection against future lawsuits.
Despite these changes, it ultimately comes down to consumers needing to do their due diligence anytime they enter into an agreement with a business. It’s especially important for transactions involving high-value items like real estate. Placing one’s trust in the wrong business could cost them tens of thousands of dollars and lead to a messy legal battle.
Industry-Wide Implications of the 72 Sold Lawsuit
Truth be told, 72 Sold is a relatively tiny name in the real estate market. It’s not a top-10 real estate company in terms of market cap, nor is it likely to even break the top 50. Nevertheless, the 72 Sold Lawsuit will likely have a major ripple effect throughout the real estate industry. And as it unfolds, it can lead to increased scrutiny of real estate marketing practices across the board.
Companies like 72 Sold rely heavily on aggressive advertising. The business and its peers may have to reassess their messaging to avoid similar legal challenges. Furthermore, the claims against 72 Sold have garnered even more attention due to the high-profile lawsuit against the National Association of Realtors (NAR).
The case will undoubtedly have an impact on consumer behavior as well. People are already skeptical about the buying and selling process, especially when it comes to the high fees associated with it. The issues that 72 Sold raises will only make things worse.
The bottom line is that many consumers are fed up with the real estate industry at large. It’s unclear what the industry will look like once the dust settles, but the 72 Sold lawsuit definitely has implications for how well-informed consumers will view real estate going forward.
Lessons for Industry Peers
If one thing is certain, it’s that 72 Sold’s peers can learn from the details of the lawsuit. The case underscores the importance of being honest with consumers. People want to know what they are signing up for and how much they will pay for real estate services. Misleading them, even if unintentionally, can lead to serious legal consequences and damage a company’s reputation.
Consumer Protection Considerations
Consumer protection agencies at the state and federal levels have become much more active in recent years. These entities, alongside the Department of Justice (DOJ), are working together with increasing frequency to hold brands accountable for their marketing claims and how they treat consumers.
Google, for instance, is facing a DOJ lawsuit that could hold the business accountable for monopolistic practices that deprive consumers of their right to choose. These cases not only illustrate a commitment to go after businesses that mistreat consumers, but they also raise awareness about the various protections that are in place.
What’s Next for Real Estate?
The outcome of the 72 Sold lawsuit probably won’t affect traditional brokerages very much. However, the case will have serious implications for the defendant and companies with a similar business model. Brokerages and other businesses within the sector are already contending with high interest rates and less buyer activity. These challenges have led to major layoffs by companies like Opendoor and the restructuring of business strategies to weather the storm.
Any business that advertises fast transactions and lower fees must be sure that the language used in marketing materials accurately reflects the process. Failing to do so could expose the company to a lawsuit similar to the one that 72 Sold is currently facing.
Other Notable Real Estate Lawsuits
The NAR lawsuit (and settlement) mentioned earlier is by far the biggest real estate legal battle in decades. The association and several of the nation’s largest brokerages reached a multi-million dollar settlement with plaintiffs. NAR and member brokerages also agreed to make several changes to its best practices and contractual agreements to promote transparency.
Buyers now have to sign a written agreement with their real estate agent before they can tour a home. While compensation for buyers’ and sellers’ agents was always negotiable, the changes required buyers’ agents to include their commission in the written agreement with their clients. Not all states adhered to that common practice before the NAR settlement.
Together, the NAR settlement and 72 Sold lawsuit could have far-reaching implications for homeowners, buyers, and realtors. As a consumer, it’s important to stay up-to-date on these cases so you can protect your rights when engaging with a real estate service provider.
How the 72 Sold Lawsuit Impacts Consumers
The lawsuit against 72 Sold highlights the complexity of real estate deals and the importance of working with a reputable real estate professional. If you are contemplating selling a home, be sure to align yourself with an ethical real estate agent who will act with your best interests in mind and be transparent about all costs associated with the deal.
While there isn’t necessarily something wrong with using a quick sell service to facilitate your real estate transaction, you should carefully review all details of the agreement to make sure that you know what you’re getting into. At the same time, remember that selling your home quickly often means leaving money on the table. It is rare that you will be able to sell your home much faster than the market average while also getting a fair value for the property.
With that in mind, balance your desire to close the deal fast with your long-term financial well-being so you can make the best decision regarding the sale of your home.