testing Featured by Sue De Legge & Associates. Your trusted San Diego real estate team. North County San Diego real estate specialists. Contact us for a complimentary consultation when you're ready to buy or sell.

Spying Sellers May Compromise Negotiations

With a greater presence of hidden cameras inside homes, real estate professionals need to consider how recordings of their clients could affect the sale.

Betsy Anderson was leading a married couple with two children and their real estate agent through a tour of her listing when she received a startling text from the seller. Anderson, a sales associate with William Pitt Sotheby’s International Realty in Madison, Conn., had been holding the back door open to keep an eye on the kids, who had gone outside to view the in-ground pool while their parents continued looking through the home. At that moment, Anderson’s client, who was not present at the property during the showing, messaged her to ask why she was letting the cool air in the house escape through the open door.

Anderson was stunned and perplexed as to how the seller was able to see what was happening inside the home. She knew of a couple of external security cameras on the front side of the $600,000 property, which were visible. It was then she learned that the seller had installed a hidden camera inside the home and was watching her every move. “I just thought [the seller’s text] was very telling,” Anderson says. “Clearly, there were things going on that I didn’t know about.”

Anderson immediately told the prospective buyers of the hidden camera and advised them that they might be under surveillance as well. Later, after speaking with her client more thoroughly, Anderson added a disclosure about the hidden camera in her marketing materials for the home so other buyers wouldn’t be surprised or feel as though their privacy was compromised. Since this experience, “I try to caution buyers when I take them into a listing: ‘Keep your comments neutral because we never know who is listening or how,’” Anderson says.

More instances are surfacing of sellers using hidden cameras to monitor activity in their homes during showings, and it may affect when, where, and how you communicate with clients about a given property. Though it may seem an appropriate practice in high-end homes containing expensive valuables, it’s not limited to the luxury real estate market. Agents have discovered hidden cameras in fixer-uppers and other lower-priced homes as well. Marisa Sanchez, a sales associate with Diamond Realty & Associates in Bossier City, La., reports finding cameras in homes in the $200,000 range in her market, while Richard Harty, SFR, managing broker of The Harty Realty Group in Highland Park, Ill., says he’s seen them in flips selling for less than $300,000 in transitioning neighborhoods. “The equipment is so affordable, any seller can really afford it,” Harty says.

The rise of smart-home technology, including smart security systems that enable remote monitoring capabilities, may help explain the prevalence of “spy cams” in homes. More than 30 million properties in the U.S. had at least one smart device in 2017—double that in 2015—according to a recent study by home technology trade group CEDIA. Further, an estimated 9.4 million homes have Wi-Fi–enabled cameras with microphones, while another 11 million have limited-function cameras trained on front doors or property exteriors, says Brad Russell, director of consumer technology research firm Parks Associates.

Warn Your Buyers

Laws on video and audio recording vary by state, and to cope with increased scrutiny from watchful sellers, some real estate professionals are advising their clients to be circumspect during showings. Cameras that capture a buyer’s exuberance or dissatisfaction with a home could reveal important negotiation leverage that the seller can later use against the buyer. “I think you’re better off not saying anything when you’re in a house—wait until you get outside,” says Pat Vosburgh, GRI, a sales associate with NextHome Gulf to Bay in St. Petersburg, Fla.

It’s important to work out a plan for communicating about a property with your clients before heading to the showing. Andie DeFelice, ABR, a sales associate with Exclusive Buyer’s Realty in Tybee Island, Ga., and the president of the National Association of Exclusive Buyer Agents, has directed clients to text her their comments as they walk through a home—even when they’re standing next to each other. “I’m noticing more and more cameras in houses, and it’s something I’m making my buyers very aware of,” DeFelice says. In order to make sure her clients are mindful of what they say and do at a showing, she advises them: “Let’s pretend that the seller is sitting in the living room.”

In some areas, agents are making an effort to be more transparent about hidden cameras in their listings. Vosburgh says practitioners who use her local MLS commonly note the presence of such cameras in their listing descriptions. She also says sign-in sheets at open houses in her area typically disclose surveillance inside the home.

Who Does the Law Protect?

There’s no blanket federal law governing the use of surveillance cameras inside private property, so you and your clients must become familiar with state and local guidance. In Florida, for example, both parties must consent to audio recording but not video. Illinois allows for video recording without accompanying audio as long as the camera is not in an area where people have a reasonable expectation of privacy, such as a bathroom.

Even so, the matter has largely been untested in court, and a lack of legal precedent may—for now—give sellers more freedom to spy. Listing agents should at least ask sellers if hidden cameras exist in their home, says Elizabeth Urbance, general counsel and vice president of legal services for Illinois REALTORS®. You may not be legally obligated to disclose hidden cameras to potential buyers, but Urbance suggests posting notice of the recording at the home’s entry points.

Finley Maxson, senior counsel for the National Association of REALTORS®, advises checking with local legal experts in your state—but don’t be surprised if there is no applicable local law just yet. “It’s a good example of where the law takes a while to catch up,” Maxson says. “I expect we’ll see more legislative action going forward.”

Even when state law restricts the use of recording devices, it’s doubtful sellers will be dissuaded from using them, Maxson notes. It’s unlikely a potential buyer or agent would go through the trouble of suing a seller over a camera. “What sort of damages would you have? This is a question of the real world vs. the law,” Maxson says. Even when the law is on your side, a lawsuit costs extra time and money, and it won’t help a buyer get the house he or she wants.

A Benefit to Sellers

Hidden cameras do, of course, have benefits for sellers who want to ensure the protection of their home, as Dan Nainan, a seller in Chevy Chase, Md., can attest. He put his mother’s home on the market last year after she died, and since it was vacant, Nainan installed a Samsung SmartCam to monitor live video inside the property from his phone.

The camera caught an agent breaking the handle on the front door as he was entering the home, Nainan says. The next time Nainan visited the home, he couldn’t get inside because of the broken handle. “I was furious,” he recalls. He also discovered that after he accepted a sale contract, his agent was still granting buyer’s agents access to the property—a situation that concerned him, he says.

Thankful for the information he gleaned, Nainan says he’d use a camera again when selling a property. And more sellers are likely to follow suit in the future. This will require real estate professionals to better prepare their clients for possible pitfalls in the showing process and to think more carefully about how to communicate with clients away from prying eyes.

JUNE 2018 | BY JOHN N. FRANK
National Association of Realtors