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Author: Jesus “Jesse” D. Gonzalez Jr., J.D. Candidate at Nashville School of Law

Originally Published: https://fieldtoforum.com/instant-offers

Disclaimer: This article is for educational and informational purposes only. The contributor is not a licensed attorney, and this content does not constitute legal advice. No attorney-client relationship is formed by reading this post or contacting the contributor. All views expressed are personal and based on the contributor’s industry experience and legal education in progress.

FACTS

Homeowners across Tennessee are increasingly targeted by “instant cash offer” programs, heavily marketed on billboards and television by prominent Realtors. These programs promise certainty and speed with a headline figure, an “instant offer” price that suggests the seller will walk away with that amount. The model functions as equity stripping. In practice, the model works as follows:

The initial instant offer is $319,300 and after discussions, the brokerage discloses several deductions from the advertised price:

Repairs: $39,486, based on the investor’s own renovation estimates.

Convenience fee: $15,965, described as covering the investor’s expected holding costs, resale commissions, and concessions.

Commission: $11,175 (3.5%), payable to the brokerage, even though the home is not listed on the open market and no buyer’s agent participates.

After applying these deductions, the homeowner’s net proceeds are reduced to approximately $253,673, excluding the seller’s $99,000 mortgage payoff. Taken together, this means the seller ultimately walks away with nearly half of the original offer erased. Proponents of the instant-offer model claim these deductions reflect the trade-off sellers accept for speed and certainty. However, in practice, the deductions far exceed ordinary transaction costs, stripping equity disproportionate to the benefit of avoiding the open market.

The brokerage emphasizes the advertised price in its communications and presents the transaction as a convenient alternative to listing on the open market. At the same time, it discourages the homeowner from seeking competitive bids by stressing that the investor’s offer is “exclusive.” The discrepancy between the headline figure and the seller’s true economic outcome is the core practice at issue.

ISSUE

Does a brokerage engage in a deceptive act under the Tennessee Consumer Protection Act or the Federal Trade Commission Act § 5 when it advertises a headline “instant offer” price but reduces the seller’s proceeds through undisclosed deductions for repairs, fees, and commissions?

RULES

Tenn. Code Ann. § 47-18-103(4). “Bait and switch” advertising, in which a seller lures consumers with one price or offer and then induces them to accept different terms, is prohibited.

Tenn. Code Ann. § 47-18-104(b)(9). Advertising goods or services with intent not to sell them as advertised constitutes a deceptive act under the Tennessee Consumer Protection Act.

Tenn. Code Ann. § 47-18-104(b)(11). Making false or misleading statements concerning the existence of, or reasons for, price reductions is a deceptive practice under the Act.

Fayne v. Vincent, 301 S.W.3d 162 (Tenn. 2009). Securing a consumer’s engagement through deceptive means, even if the truth is later disclosed, may violate the Tennessee Consumer Protection Act.

Lapinsky v. Cook, 536 S.W.3d 425 (Tenn. 2016). Misrepresentations or omissions that materially affect the financial terms of a real estate transaction may constitute deceptive practices under the Act.

Stanfill v. Mountain, 301 S.W.3d 179 (Tenn. 2009). Real estate brokers and professional sellers must disclose material facts in good faith; misleading or incomplete representations can constitute deceptive acts under the Act.

State ex rel. Slatery v. HRC Med. Ctrs., Inc., 603 S.W.3d 1 (Tenn. 2019). Negligent misrepresentations affecting the financial aspects of a consumer transaction may be unfair or deceptive practices under the Act.

Federal Trade Commission Act, 15 U.S.C. § 45(a). Unfair or deceptive acts or practices in or affecting commerce are unlawful, and an act is deceptive if it is likely to mislead a reasonable consumer about a material fact.

FTC v. Johnson, 96 F. Supp. 3d 1110 (D. Nev. 2015). Disclosures that obscure the true financial terms of a transaction, even if some information is provided, may be deceptive under § 5 of the FTC Act.

Darling v. W. Thrift & Loan, 600 F. Supp. 2d 189 (D.D.C. 2009). Disclaimers do not cure otherwise misleading statements about financial terms if consumers are led to believe that headline figures represent the true terms of the transaction.

ANALYSIS

The Tennessee Consumer Protection Act defines “bait and switch” advertising as a practice in which a seller lures consumers with one price or offer but then induces them to accept materially different terms. Such conduct is expressly prohibited under the Act.

The brokerage advertised a headline “instant offer” of $319,300 to the seller but later presented materially different terms by deducting $66,626 in repair costs, fees, and commission obligations.

Because the advertised $319,300 figure was never intended as the true economic bargain, and the seller was induced to accept far worse terms, the practice mirrors the bait-and-switch conduct defined in § 47-18-103(4) and prohibited under § 47-18-104(b). The statutory definition in § 103(4) captures the structure of the brokerage’s scheme.

The bait-and-switch framework under § 103(4) captures the structure of the brokerage’s scheme, but Tennessee law also prohibits the more specific act of advertising with no intent to sell at the stated terms.

Under Tenn. Code Ann. § 47-18-104(b)(9), advertising goods or services with intent not to sell them as advertised constitutes a deceptive act.

The brokerage advertised an “instant offer” of $319,300, but “It was never possible for the seller to net the advertised $319,300, because deductions were inevitable, undisclosed, and exceeded ordinary market costs. After deductions, the seller’s net proceeds fell to $253,673. After paying off a $99,000 mortgage, the seller ultimately walked away with approximately $153,000 in cash, less than half the $319,300 headline offer.

Because the brokerage structured the transaction so the advertised figure could never be realized in practice, the offer amounts to an illusory promise and falls within the prohibition on advertising with no intent to sell as advertised under § 47-18-104(b)(9).

While § 104(b)(9) addresses the deception in advertising an offer never intended to be honored, § 104(b)(11) targets the related practice of misrepresenting the reasons for or amounts of price reductions.

Under Tenn. Code Ann. § 47-18-104(b)(11), making false or misleading statements concerning the reasons for existence of, or amounts of price reductions is a deceptive practice.

The brokerage imposed a $15,965 “convenience fee,” presenting it as a necessary seller obligation when in fact it reflected anticipated buyer resale expenses.

Because the buyer’s agent is mischaracterizing a buyer’s costs as a seller’s price reduction, the brokerage distorted the true structure of the transaction. While the reductions are not fictitious, they are mischaracterized as seller obligations when they are, in fact, investor-side costs. Mischaracterization of reductions is just as deceptive as fabricating them and thus falls within § 104(b)(11). Investors justify this as compensation for risk and holding costs. Yet, in a traditional sale, these are the buyer’s responsibilities, not costs shifted to the seller. By rebranding buyer-side expenses as seller obligations, the model does not compensate for risk; it disguises profit-taking. Courts applying § 104(b)(11) focus not only on fabricated discounts but also on misleading explanations for reductions. Here, labeling investor-side costs as seller obligations creates the very kind of misleading justification the statute was designed to prevent.

The statutory prohibitions show that misrepresentations in advertising and fee structures are deceptive; Tennessee case law reinforces that even later disclosure does not cure an initial deception.

In Fayne v. Vincent, 301 S.W.3d 162 (Tenn. 2009), sellers failed to disclose a known septic defect. The Tennessee Supreme Court held that this omission induced the buyer to proceed under false pretenses.

The Court explained that securing a consumer’s engagement through deceptive means, even if the truth is later disclosed, may violate the TCPA.

In the instant-offer scenario, the brokerage induced the seller with a $319,300 headline figure but only revealed substantial deductions after the seller pressed for details.

As in Fayne, the initial deception is not cured by later disclosure. Although Fayne dealt with property defects rather than financial deductions, the principle is the same: undisclosed or misleading terms that alter the economic bargain fall within the scope of the TCPA. Supporters might argue that later disclosure of deductions provides homeowners with clarity before closing. But the timing matters: once a seller has been anchored to the headline figure and discouraged from seeking competing bids, disclosure of massive deductions is not a real choice, it is coercion dressed as consent

Fayne established that later disclosure does not cure an initial deception. Lapinsky builds on this principle by emphasizing that omissions materially affecting the financial terms of a real estate transaction fall within the TCPA.

In Lapinsky v. Cook, 536 S.W.3d 425 (Tenn. 2016), the Tennessee Supreme Court considered whether sellers acting in a business capacity violated the TCPA by failing to disclose septic system defects that materially altered the property’s economic value.

The Court held that misrepresentations or omissions that materially affect the financial terms of a real estate transaction may constitute deceptive practices under the TCPA.

In the instant-offer model, the brokerage failed to immediately disclose repair deductions, a $15,965 “convenience fee,” and a commission obligation, all of which reduced the seller’s expected proceeds by more than $160,000.

As in Lapinsky, the omission of facts that materially altered the economic bargain supports TCPA liability. Although Lapinsky dealt with property defects rather than financial deductions, it strengthens the argument that undisclosed or misleading terms, whether relating to property condition or financial costs, fall within the TCPA.

This principal dovetails with the Tennessee Supreme Court’s broader recognition in Stanfill that brokers owe a duty of full and good faith disclosure in real estate transactions.

In Stanfill v. Mountain, 301 S.W.3d 179 (Tenn. 2009), brokers failed to disclose material environmental liabilities in a real estate transaction, causing the buyer to proceed under incomplete information.

The Court held that real estate brokers and professional sellers must disclose material facts in good faith, and that misleading or incomplete representations may constitute deceptive acts under the TCPA.

In the instant-offer model, the brokerage emphasized a $319,300 headline price while withholding full disclosure of deductions and fees until later in negotiations.

Just as the incomplete disclosures in Stanfill misled consumers about environmental risks, the brokerage’s incomplete disclosures here misled the seller about the true financial outcome. This supports a claim of deceptive practice under the TCPA. Stanfill’s duty of full disclosure applies equally to financial structuring as to environmental risk, since both materially affect the consumer’s bargain.

While Stanfill emphasized brokers’ duties of good-faith disclosure in real estate, Tennessee courts have also applied the TCPA broadly to deceptive financial representations in other consumer contexts.

In State ex rel. Slatery v. HRC Med. Ctrs., Inc., 603 S.W.3d 1 (Tenn. 2019), the Tennessee Supreme Court considered whether misleading representations about the pricing of medical services violated the TCPA. Consumers were induced to purchase treatments based on inaccurate or incomplete cost disclosures.

Although arising outside real estate, the court’s reasoning applies broadly: consumer protection principles extend to financial misrepresentations in any transaction. The Court held that negligent misrepresentations affecting the financial aspects of a consumer transaction may constitute unfair or deceptive practices under the TCPA.

In the instant-offer model, the brokerage characterized a $15,965 “convenience fee” as a seller obligation, even though it represented the buyer’s projected resale expense.

As in Slatery, the mischaracterization of financial terms materially misleads the consumer. By treating the buyer’s expenses as a seller’s cost, the brokerage’s conduct falls within the TCPA’s prohibition on deceptive financial practices. Although Slatery arose outside real estate, it confirms Tennessee courts treat financial misrepresentations in any consumer transaction as actionable deception.

Tennessee law recognizes that financial misrepresentations are deceptive, and this principle finds parallel support at the federal level under the FTC Act.

Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce. An act is deceptive if it is likely to mislead a reasonable consumer about a material fact.

The brokerage’s $319,300 headline figure created the impression that the seller would net that amount, while deductions for repairs, a convenience fee, and commission reduced proceeds by nearly 50 percent.

Because a reasonable consumer would be misled by this discrepancy, the brokerage’s conduct may constitute a deceptive act under § 5 of the FTC Act.

Courts applying § 5 have confirmed that even when some disclosures are made, they may still be deceptive if they obscure the true financial terms of the transaction.

In FTC v. Johnson, 96 F. Supp. 3d 1110 (D. Nev. 2015), the court considered business practices that disclosed financial terms in ways that obscured the full cost of consumer transactions. Although some information was provided, the structure of the communication misled consumers.

The court held that disclosures that obscure the true financial terms of a transaction, even if some information is provided, may be deceptive under § 5 of the FTC Act.

In the instant-offer case, the brokerage eventually disclosed repair costs, a “convenience fee,” and commissions, but only after emphasizing the higher $319,300 headline price.

As in Johnson, partial disclosure after the fact did not cure the misleading nature of the headline figure. The practice remains deceptive because it obscured the true financial terms at the outset. Even if the brokerage argues that sellers knowingly accept less for convenience, the magnitude of the reduction, nearly half the equity erased, exceeds any reasonable valuation of speed. No rational consumer would knowingly exchange $66,626 of value to close a few weeks faster

Just as partial disclosure cannot cure deception under Johnson, courts have also held that disclaimers do not shield misleading headline figures from liability.

In Darling v. W. Thrift & Loan, 600 F. Supp. 2d 189 (D.D.C. 2009), consumers were initially misled by headline terms that did not reflect the actual financial obligations. The defendant argued that disclaimers corrected the misunderstanding.

The court held that disclaimers do not cure otherwise misleading statements about financial terms if consumers are led to believe that headline figures represent the true terms of the transaction.

In the instant-offer context, the brokerage could argue that disclosures of deductions served as disclaimers to clarify the $319,300 figure.

As in Darling, however, disclaimers do not eliminate deception when the headline offer misleads consumers about material facts. The $319,300 figure remained misleading even after subsequent disclosures of deductions. Although Darling arose in the lending context, courts apply the same consumer protection principles to real estate transactions.

CONCLUSION

The instant-offer model, as structured, misleads homeowners by advertising a headline price that does not reflect the actual proceeds they will receive. Tennessee law prohibits bait-and-switch tactics, advertising with no intent to sell as promised, and misrepresentations about price reductions. Tennessee courts have further held that omissions and mischaracterizations of financial terms, even when later disclosed, may violate the Tennessee Consumer Protection Act. Federal law under the FTC Act § 5 reinforces this principle, finding deceptive any practice likely to mislead a reasonable consumer about material financial terms, even where disclaimers or partial disclosures are offered.

Applied here, a brokerage that markets a $319,300 “instant offer” while deducting repair estimates, a “convenience fee,” and commission, reducing the seller’s proceeds by nearly half, engages in a practice squarely prohibited by both state and federal law. The conduct fits within the statutory prohibitions on deceptive advertising, mirrors the bait-and-switch conduct Tennessee has long rejected, and violates the duty of good-faith disclosure owed by real estate professionals.

Accordingly, the practice of assuring homeowners of a simple, fee-free “instant offer” while stripping away their equity through undisclosed deductions constitutes a deceptive act under the Tennessee Consumer Protection Act and is actionable as a deceptive practice under the Federal Trade Commission Act § 5. Although investors defend these programs as offering homeowners certainty and convenience, the record shows that what is marketed as a trade-off is, in fact, a bait-and-switch, one that exploits urgency to siphon away hard-earned equity.