Listing a House Above the Appraised Value

Rav Yosef Greenwald, Rav of Khal Dexter Park and Dayan in the Bais HaVaad

Case: Housing prices today are rising rapidly and it is very common for sellers to receive offers above their asking price. I know one seller who was told by an agent that he would appraise his house at $650,000. He decided to list it for $750,000 in hopes that he could get that price as a result of the housing shortage.

Question: Since he is charging above the appraised market price, would that be a problem of onaah?

Answer: In terms of the letter-of-the-law, there is very little a buyer can claim in such a case. If the market is being driven up due to various factors, that would create a new market price, so one cannot call that ona’ah. 

To bring out this point, Tosafos suggests that it is possible that the reason that there is a rule that one cannot make a claim of onaah on karka (land) is because the real estate market is based almost completely on location. It’s impossible to pin down a market price for land because the value of a property fluctuates so much depending on where it is located. The same would be true for the housing market. Someone may be willing to pay much more for a house if it is located in an area that is desirable for him (good neighbors, yeshivas…), which would make it impossible to pin down a price in regards to ona’ah.

In terms of right and wrong, it is very difficult to say when someone is just exercising his right to make a profit in the current market and when someone is being unscrupulous. That entire discussion is very ambiguous and very relative to the situation. What definitely is true – and is quoted as halacha in the Shulchan Aruch – is that the leaders of a town have a responsibility to create some kind of viable system where things do not get out of hand. That sugya is known as hafka’as shearim and is definitely the responsible way to protect communities from rapid fluctuations in the market. This is more of a social issue than a specific ona’ah issue, but it is very relevant in today’s climate.