Don't Judge an Ad by Its Offer

Or don't be fooled by bogus classifieds with mouth-watering prices for homes.

Looking to purchase an apartment in the Kiryat Hasharon neighborhood of Netanya, a young couple came across several classified ads posted by a realtor on the Internet. Impressed by the photos, and a price that wasn't sky-high, the couple tried calling the listed phone number a number of times but were unable to get hold of the realtor, who also failed to return their calls or respond to their recorded or text messages.

The couple was at a loss to explain why the realtor was avoiding them - until, that is, they went to see a home being sold by someone who happened to have heard about him. If you examine the photographs more closely, they were told, you will see they all come from different projects. "There is no such apartment," the seller said, "and I'm not even sure the agency really exists."

A recent survey indicates that this realtor, who the couple stopped trying to contact, isn't one of a kind.

It all begins with the online classifieds that have taken Israel by storm. For several years, the various Internet boards, particularly yad2 and WinWin, have been featuring thousands of advertisements and enjoying scores of thousands of hits a day. A large proportion of the ads deal with real estate - homes for sale or rent.

But their outstanding success also comes with some unwelcome side effects. The anonymity afforded by the Internet allows the new momentous forums to be exploited to promote economic interests through questionable means. These include running multiple ads for the same home to attain wider exposure, or realtors posing as private individuals to fool buyers who aren't interested in dealing with agents. Yet another, less-known phenomenon is that of fictitious ads. According to various real estate players, such ads are placed on the classifieds websites in an attempt to manipulate neighborhood property prices.

Guy Tamir, owner of Tamir Nadlan, which deals with National Master Plan 38 (Tama 38 ) projects, carried out research on the subject in the framework of his graduate studies at the Technion - Israel Institute of Technology, Haifa. He chose this particular subject, he explained, having experienced it first-hand. "This is something that is happening in today's market," he says. "There are property dealers trying to guide the market according to their whims, and there are those who have turned this into a full-time job and make their living from it."

According to Tamir, there are two types of fictitious ads: The first includes ads that display prices much higher than the real value of the displayed property. These are published shortly before the investor plans on selling his property, in close proximity to the fake home. The second type are ads presenting particularly low prices that appear when the investor is about to buy.

"Before purchasing, these dealers try to lower the value of homes in the area," Tamir explains. "They zero in on a home and start placing ads showing similar homes in the area, but at 10% to 20% lower in price. If you call about one of these homes, you probability won't get through, or the person answering will invite you to come see it - as soon as he gets back from abroad, so call back in a couple of weeks."

Tamir conducted his study under the guidance of Dr. Yuval Arbel, in central and southern Ramat Gan, examining dozens of ads for home sales appearing in 2009, 2010 and early 2011. "This is an area in which I work, so I know the price level of each building and every street," he says. "It's easier for me to pick out absurd ads in this area."

He gathered the data in real time from the yad2 and Homeless websites, as well as from the Meidan database, which aggregates most of the residential real estate ads from the classifieds.

As an example, Tamir points out an ad that appeared in February 2010 for a five-room apartment on Tel Hai Street in Ramat Gan. The ad says the apartment, which includes a parking space, covers 125 square meters, has been renovated, and is located on the second floor of a building with an elevator. The asking price was NIS 1.37 million.

Tamir says another five ads appeared at the same time for similar apartments on the street, at prices ranging between NIS 1.5 million and NIS 2.3 million. According to his own calculations, the market price for an apartment like this was NIS 1.87 million at the time - some 36% higher than the price in the anomalous ad. "Nobody answered the listed phone number from the day the ad was placed to the day it was taken down," says Tamir. "It was removed after several months, probably by the site operator."

Web helped spark price hikes

Bogus ads have been around for a number of years. "The phenomenon exists, and has become another tool used by certain people in negotiations," says Adina Chaham, CEO of the Anglo-Saxon real estate brokerage chain. "People looking to buy a property cheaply, let's say, approach the owner of the home they're interested in and say to him: 'Look, there's a similar home for which they're asking such and such.'"

Chaham says she's received reports over the last few years about the fake ads from the chain's agents, who often have to deal with clients confused by these ads and unsure about the real value of their homes.

"Advertising on the classifieds websites doesn't cost private individuals anything, only brokers," she points out. "So individuals can allow themselves to place such ads. They could be found out; but even then, nothing tragic will happen, and that's how they try to influence price levels."

To what extent could this tool really affect actual prices?

"It definitely can affect the final price of a property," Chaham says. "In the last few years, as the market has experienced extreme price increases, Internet sites were one of the main catalysts for this. We've now entered a new period with much fewer deals and in which each transaction is carried out slowly and carefully, so people have much more time to check out prices thoroughly. But when prices were rising sharply, this tool had a much greater effect."

Roy Segev, a VP at yad2, rejects Chaham's position. He agrees that the phenomenon exists, but claims the number of fake ads on the website in proportion to the overall volume of ads appearing there is negligible. "Market forces are much greater than three or four ads in one area or another," he says. "Even if there's someone posting three ads with exaggerated prices, someone else in contrast will be posting three ads with low prices. The market is composed of buyers and sellers, and it always finds its balance."

Besides, he adds, the website engages in intensive efforts to prevent such things. "Half the website's staff - 35 of 70 employees - provides customer service, and their entire job is to answer complaints, review the ads, and filter and sort them. In this reality, the ability of such ads remaining on the site is close to nil, as is their ability to affect prices."

What do you do when you receive a complaint about a fictitious ad?

"We take down the ad right away, without a question," Segev says. "Only afterwards, our operator phones the number shown on the ad to confirm the information. Our objective is, above all, the excellence of content, so any suspicion about users being misled is dealt with immediately. But there really isn't a large mass of such ads. I could tell you that dealing with other things, like duplicate ads or brokers masquerading as private people, keep us much busier."

Segev adds that discovering a fake ad sets off a series of measures against the advertiser. "We block the phone numbers and usernames," he says. "Over time, we have become more advanced technologically and have refined our methods."

But beyond meticulous quality control of the websites, the absolute solution for the phenomenon would actually seem to be in the hands of the buyers and sellers on the online boards: Anyone bothering to phone the people behind the high or low-priced ads could avoid losing money as a result of the questionable practice.

"I would advise anyone conducting negotiations and shown ads from online sites as proof about market prices to go check the ads himself," Chaham says.

Tamir concurs: "I advise the public not to be lazy and to go out and see as many homes as possible."