Following lawsuits in Pennsylvania, Massachusetts, Florida and Ohio, the brokerage is redrafting 40-year contracts that offer homeowners cash in exchange for exclusive rights to list their home.
In these times, double down — on your skills, on your knowledge, on you. Join us Aug. 8-10 at Inman Connect Las Vegas to lean into the shift and learn from the best. Get your ticket now for the best price.
MV Realty has stopped signing new “homeowner benefit agreements” following lawsuits filed by four states against the real estate brokerage and a warning from the Federal Communications Commission.
The brokerage offers impoverished homeowners cash in exchange for a 40-year contract to list their home and a lien on their property to secure MV Realty’s real estate commission.
The attorney general of Florida, where MV Realty is based, became the first state to file suit against the company at the end of November for alleged deceptive practices, followed by Pennsylvania and Massachusetts in December, and Ohio earlier this month. The FCC also also called out the company in January for “an apparent homeowner-focused robocall scam campaign.”
The brokerage, which operates in 33 states and has more than 500 licensed agents, had offered “homeowner benefit agreements” since 2018, signing more than 35,000 during that time.
“We are taking the concerns of regulators and legislators seriously and are implementing immediate, concrete steps to address any potential shortcomings — real or perceived — of our innovative Homeowner Benefit Program,” an MV Realty spokesperson told Inman in an emailed statement.
“MV Realty has paused entering into any new agreements in all states and have brought in outside counsel to evaluate and redraft our HBA contract to ensure greater transparency for consumers. The company is also providing further training to MV team members who work directly with HBA customers to ensure they are scrupulous when dealing with consumers and adhere to all company policies.
“MV Realty is committed to working with policymakers and others in government on pragmatic regulations that ensure fair and ethical practices within the real estate industry and address any concerns regarding the HBA program.”
Inman has asked when MV Realty began the pause, how long it will last, what is specifically changing in regards to what MV team members are being trained to do, and whether the brokerage is still enforcing current agreements. We will update this story if and when we hear back.
Under MV Realty’s homeowner benefit 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.
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. MV Realty determines the property’s value.
If there is no buyer broker involved, MV Realty receives a minimum 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 heirs of a property and if a homeowner defaults, the agreement specifies that MV Realty will impose a lien or a mortgage 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.
The brokerage also charges an early-termination fee equal to 3 percent of the value of the home if the homeowner decides to cancel the contract before the 40 years are up.
“Under a traditional real estate transaction agreement, homeowners grant listing agents the rights to sell their home without compensation,” MV Realty’s spokesperson said.
“Our innovative HBA program compensates homeowners with an upfront, direct payment that they can save, spend, or invest in exchange for granting MV exclusive rights to list the home only if they choose to sell within the duration of the agreement for the price the homeowners determine.
“No homeowner is under any obligation to sell their home under the terms of the HBA and is not required to repay funds if they do not choose to list their home within the duration of the agreement.”
- SEO Powered Content & PR Distribution. Get Amplified Today.
- Platoblockchain. Web3 Metaverse Intelligence. Knowledge Amplified. Access Here.
- Source: https://www.inman.com/2023/02/27/mv-realty-halts-homeowner-benefit-agreements-amid-4-investigations/