– Excerpted from article originally published at Inman News – Andrea V. Brambila
A brokerage that offers cash-strapped homeowners’ money in exchange for a 40-year contract to list their home is under investigation by state regulators.
Florida-based MV Realty, which operates in 33 states and has more than 500 licensed agents, has been offering “homeowner benefit agreements” since 2018. Under these agreements, the brokerage pays homeowners between $300 and $5,000 (depending on the value of the home) in cash up front for signing a deal in which they agree that if they decide to sell their home anytime in the next 40 years, they will list the home with MV Realty as a transaction broker.
The agreements, which more than 30,000 homeowners have signed across the country, have attracted attention because some consider them deceptive and predatory, which MV Realty denies.
“I can confirm that our office is investigating MV Realty,” Nazneen Ahmed, press secretary for North Carolina’s Department of Justice and Attorney General’s office, told Inman via email. “Because this investigation is ongoing, I’m unable to comment further.”
“The North Carolina Real Estate Commission has received 6-7 consumer complaints about MV Realty’s Homeowner Benefit Program,” Janet B. Thoren, the commission’s legal counsel, told Inman via email.
“It is my understanding that a number of other state Attorneys General are looking at this program, including our own. Our investigation has been going on for a few months now, and it is not over.”
“I think [customers] don’t fully understand the terms of the contract, and what that means, and at the time most of these people are desperate, and they are in need of some cash,” Thoren told the news outlet.
Regarding memorandums that MV Realty files on the deeds of properties, she added, “It’s been treated as a lien by the closing attorneys, as well as by the title insurance companies, and so that lien has to be satisfied before the property can be sold.”
According to MV Realty’s homeowner benefit agreements, if a buyer broker is involved in the transaction, the total commission must add up to at least 6 percent of the total sales price, with MV Realty receiving at least 3 percent of the sales price or 3 percent of the property’s value at the time the agreement is signed, whichever is greater.
If there is no buyer broker involved, MV Realty receives a minimum of 6 percent of the total sales price or 3 percent of the property’s value at the time the agreement is signed, whichever is greater.
If the homeowner decides to list the home with another brokerage, the homeowner owes MV Realty 3 percent of the property’s value at the time the agreement is signed, which can add up to thousands of dollars.
The agreement binds any future property heirs, and if a homeowner defaults, the agreement specifies that MV Realty will impose a lien on the property for the amounts owed. The agreement includes an arbitration clause and precludes the homeowner from participating in any class action litigation against MV Realty.
“What they’re receiving in terms of consideration is so small compared to the rights that they’re giving up. The inequities are just so great,” Rebekah Lusk, a Maryland attorney who practices real estate law, told The Baltimore Banner, a local news nonprofit, about MV Realty’s contracts. “It’s an absolutely predatory agreement.”
MV Realty spokesperson Diana London told Inman that the brokerage makes the terms of its agreement clear to homeowners.
“There is nothing improper or predatory about [offering] a homeowner money today for the right to be their agent in the future,” London said.
“The Homeowner Benefit Agreement fully discloses all key terms in clear English, as well as featuring them on numerous documents provided to the customer. They are also in plain English on our website.”
Prominent real estate broker Joe Rand, Chief Creative Officer at Howard Hanna Rand Realty and a licensed attorney suggested MV Realty’s practice is immoral and a potential violation of Article 1 of the Realtor Code of Ethics.
“I actually had this idea about 15 years ago, thought about it for maybe 10 minutes, and decided I didn’t want to go to hell,” Rand tweeted in late October. If these brokers are REALTORS, they’re pretty clearly in violation of the Code of Ethics requirement to treat all parties to a transaction fairly.
– Joe Rand (
