How Sellers Are Using Smart Cameras To Eavesdrop on Homebuyers: ‘Consider Yourself in a Reality Show’

Smart home security was designed to keep burglars out, but it's increasingly being used to keep tabs on potential buyers—creating a tense new dynamic in the real estate market.

Almost three-quarters (72%) of recent homebuyers say they have either seen or suspected cameras, microphones, or recording devices during a home tour, according to a recent survey by LendingTree.

And, at least 56% of sellers surveyed admitted they had recording devices active during a walkthrough.

While most sellers (61%) surveyed said their tech setup is for protection, at least 19% admitted they used the devices to listen in during showings to find out what potential buyers liked or disliked about the home, and at least 18% said they wanted to gauge the buyers' interest. Another 6% said they wanted to hear what their real estate agent said about their home.

"Homebuyers today should just assume everything they say or do is being recorded when they are looking at homes and plan accordingly," says Cara Ameer, an agent with Coldwell Banker who is licensed in California and Florida. "The seller is likely watching from somewhere."

The danger of using security devices as spy cams, though, is that it can stifle the home buying process.

"Once the buyer realizes that there is audiovisual recording, he/she stops talking, tours quickly, and leaves the property without creating any emotional attachment," says Daniel Cabrera, owner of Sell My House Fast SA TX in San Antonio. 

"In other words, a silent buyer is a buyer that never falls in love with the house." 

Is it legal to have security cameras on during home showings?

One of the first questions that comes to mind for most people is the legality of recording home showings, and with good reason. Privacy laws vary among federal, state, and even local municipalities.

While a homeowner is absolutely allowed to protect their property with security cameras, if potential buyers don't know they're being recorded with audiovisual devices, things can get sticky.

"Video recording inside the private home is a common practice. Audio is a dangerous legal minefield," says Greg Field, a specialized Solar Home Realtor® with HomeSmart Realty Pros in Tempe, AZ.

Many states, like Arizona, function under consent statutes that require notification that a recording is in progress, or active participation in a conversation. As a result, a seller eavesdropping on a buyer may be breaking the law.

"Because a lot of modern consumer electronics such as Ring, Nest, or Blink automatically record HD audio, sellers simply plug them in and then do not pay attention anymore," says Field, who adds that sellers often believe they have the right to record whatever happens inside their home due to property ownership.

"If the buyer or showing agent does not know that the microphone is recording everything they say, there is no consent from any party in that room. That is not only a violation of the real estate ethics code, but it also becomes a possible wiretapping case."

Smart home security devices are on the rise, but keeping them on during home walkthroughs could violate laws in some states. (Getty Images)

To protect clients, some brokerages now require sellers to sign agreements stating that they won't listen in during showings. The presence of home security systems are also supposed to be noted in MLS listings as there is a field that asks about audio/video surveillance. 

"Some agents also put in the private agent remarks regarding if that is in use as a heads up, but audio should really be disabled to be compliant with the law," says Ameer. "However, this isn’t really being enforced based on what I’ve seen yet and it’s hard to police."

How does being recorded affect potential homebuyers' behavior?

Knowing that they're likely being monitored as they tour a home, potential homebuyers are now finding themselves on guard.

According to the LendingTree survey, at least 22% of prospective homebuyers said they avoided discussing their offer strategy or budget while inside the home, and communicated with their real estate agent only by text while within the house.

"Buyers should be able to share their impressions of the home as they tour it and openly discuss layout, condition, repairs, smells, noise, awkward spaces, price, and whether the home actually fits their life," says Sander Scott, a broker and owner of Net Real Estate in Northern Michigan.

"However, the prevalence of these devices have generally made the showing experience for buyers less useful overall because buyers need to refrain from verbalizing their thoughts as they tour the home." 

The saddest part is that potential buyers feel like they have to mask their enthusiasm for a home they like, with 22% avoiding showing excitement for a home so they don't influence future negotiations. Another 21% avoid saying anything negative for the same reason.

Cameras can also make people feel uncomfortable, to the point that 19% of homebuyers say they've left a showing or open house because of the feeling of being watched.

"I remember showing out-of-town buyers one home that had cameras literally in every room staring at us—there was one in the living room on the fireplace mantle and one on the dressers in the bedrooms—it was the most uncomfortable feeling ever," says Ameer.  "The buyers felt like they had to tiptoe through the house. Needless to say, we were all creeped out and didn’t want to continue the showing." 

Sellers are also affected by security cam footage

There are of course legitimate reasons why sellers want their spy cams on during showings, especially when it comes to protecting their property.

"Many sellers don’t want to disable the audio in their doorbell for safety and security reasons, especially when the home is on display for the world to see," says Ameer. 

However, sellers who do listen in on home tours sometimes get more than they bargained for, and not always in a good way.

"My experience is sellers that watch their house get shown always get their feelings hurt," says America Foy, a broker associate with The Grubb Company in the East Bay Area of California. "They hear buyers complaining about the smell, how cheap the closet mirrors look, how dark the property is, and the occasional, 'I like the kitchen counters...' never quite makes up for 'the bathroom looks like it escaped from 1989'."

On the other hand, cameras do sometimes protect a seller's property.

"Once at a showing in Scottsdale, one child knocked over the custom lighting fixture in a foyer. The showing agent claimed that the glass was already on the floor. Footage from the foyer camera showed this kid pulling the fixture," says Field. "Game over. Insurance of the brokerage paid the claim without problems."

Occasionally, however, a seller will hear something that can change the course of a future negotiation, which is probably the biggest concern right now for buyers and their agents.

Experts warn that buyers should go into showings with the assumption that spy cams may be active. (Getty Images)

Recordings can ruin real-life buyer and seller negotiations

Before there was audiovisual surveillance, most comments about a home would come from feedback after a showing between the listing and buyers' agents. Today, it can happen in real time before a potential buyer has even walked in the door.

"Modern smart doorbells capture crystal-clear audio 50 feet away from the front door," says Field. "From the moment you arrive to the house, consider yourself in a reality show."

Ameer says she always advises her clients to check their behavior as soon as they approach the front door. "I tell them to keep their comments/feedback to themselves, and we can discuss when we get back in the car."

Field adds that he actually saw a deal fail in Tempe because of a recording inside a home.

"There was an active smart hub in the countertop. The buyers came, insulted the interior paint job, said nasty things about the seller, and openly boasted how low their offer will be. And they said this in front of the person who was watching it on their cell phone live," says Field.

The owner took it personally and two days later, when those buyers made an offer, she rejected it immediately.

"Egos destroy deals way faster than leaky roofs."

However, the greatest potentially damaging comments a prospective buyer can make "on camera" are financial.

"The comments a potential buyer makes about the cash they have available to buy the potential property, how flexible their timeline is, what their contingencies are and how costly or how far their pre-approval stretches, affect or severely limit the potential buyer's negotiating position," says Cody Schuiteboer, president and CEO of Best Interest Financial.

In other words, there's a reason most buyer's agents now prep their clients pre-showing not to discuss anything related to numbers, motivation, and strategy inside the property.

"A seller who overhears that a potential buyer has the financial means to buy the property and is also willing to buy the property has the incentive to hold firm or counter the price," says Schuiteboer. "The most effective way to ensure you don't overpay for a potential property is to have discipline about what you say."

The bottom line is that for now, buyers should go into showings with the assumption that spy cams may be active.

"Treat every home visit as a formal business negotiation held in a public place," says Field. "Control your emotions until you leave the neighborhood."