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IACM 2023

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Deception In Disclosure Statements In Real Estate Negotiation

This study examined how sellers write disclosure statements in real-estate negotiations and how buyers react to those statements. In the first phase, using a scenario method, in response to a property description that detailed noise issues, business students, in the role of seller, wrote disclosure statements. There was remarkable variance in the statements, with about 14% reflecting complete honesty and 86% involving some element of deception. In the second phase, we used an actual seller’s disclosure statement (obtained via LexisNexis) that in real life led to a multimillion-dollar civil lawsuit that, after a year, settled in mediation prior to jury trial. Thirty-two participants (44%) judged this seller’s statement to be a highly satisfactory disclosure statement. This suggests that sellers generally are not good at knowing what sort of disclosure statement will keep them out of litigation.

Peter Carnevale
University of Southern California
United States


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