Everett, WA — Last December, Linda Hascall was in need of some cash. On Facebook, she found a company called HomeOptions, which made her an offer: it would become the future realtor of her Everett home for $1,300.
“So then I talk to the man. I said, ‘So you want to pay me money, if I ever want to sell my home?’ He says yes,” says Hascall.
What she didn’t fully understand was that for that $1,300, she gave the company exclusive listing rights to her home for 40 years.
Have you ever seen a 40-year exclusive agreement?
“Um, no, that’s a new one on me. I think typical is six months to 12 months,” says Rachel Mehmedagic, president of Seattle King County Realtors.
A lot can change in 40 years.
“I think it’s less about the money you’re getting upfront and what you’re giving away on the back end,” says Mehmedagic.
One thing Hascall gave up was choice. She had to pick a realtor from the HomeOptions “network of affiliate brokers.”
The company declined to tell us who those realtors are.
It also put a lien on her property to make sure she follows through with the deal.
That deal locks in a 6% commission for HomeOptions and requires 3% to cancel the contract.
“It’s a business model that’s out there. It’s not one we employ or anyone in the realtor organization employs,” says Mehmedagic.
What counts as a sale?
We showed the contract to Seattle University Law professor Steven Bender.
“This was a difficult read. There are lots of uncertainties. And ambiguities, vague language,” says Bender.
He says Linda can’t enter into a reverse mortgage or gift the property without possibly involving a payment to the company.
“It was shocking to me, including the fact that if I create a trust – including a living trust – if I wanted to get my estate in order, that too seemed to be a tripwire,” says Bender. “There were tripwires, it was a minefield of ways that could trigger that payment of commission much sooner than 40 years from now.”
Then he mentioned the death provision of the deal. It says if the estate doesn’t assume the obligations of the agreement within 60 days of the owner’s death, they’ll be in breach of the contract, and will have to pay 6% of the fair market value of the home to the company, which, in Linda’s case, is $38,400.
“The estate, which has to react within 60 days, may or may not be aware of this. Let’s assume that 20 or 30 years from now — if it goes on that long — who remembers what was signed?” says Bender. “And if you’ve done all that and reveal it, do you have the money?”
Targeting Washington homeowners
According to county records, we found that HomeOptions has done more than 20 deals in eight Western Washington counties.
The company is based in California, which is completely legal, according to Washington’s Department of Licensing, which regulates the real estate industry in the state.
“If you want to be a real estate company, you just have to have a physical address and a telephone number in Washington state,” says DOL spokeswoman Christine Anthony.
That’s right. The company does have a physical address — it’s listed as a “registered agent business.” Basically, a mailbox located in downtown Spokane.
“If I would have known that, I would have never signed anything. I would have in a polite way suggested where the $1,300 could go,” says Hascall.
In a response to an Attorney General’s consumer complaint filed on Hascall’s behalf, HomeOptions says, “Ms. Hascall’s contract with HomeOptions is a binding contract obtained and enforceable in violation of no laws, rules or ethics.”
How can you get out?
Hascall wants out of the deal. Realtors Michel Charbonnier and Sara Noet have volunteered to help.
“I tried to get them to just accept the $1,300 that was borrowed originally. So, OK, we’ll give you back your $1,300. But that’s not an option. They’re hardcore. They want 6% of the purchase price, in order to release the lien in order to sell her house,” says Noet.
“It needs to be stopped. Something needs to happen,” says Charbonnier.
In the end, Linda admits she should have looked carefully at the contract and asked for help before signing it. Now she wants to make sure others don’t make the same mistake.
“I didn’t read all the way through it. And that’s my mistake probably. And sometimes I think when people are at their, there’s a dire strait in anyone. It can happen unfortunately,” says Hascall.
Again, HomeOptions says you don’t have to pay the money back if you don’t sell your home on this 40-year deal.
If you’re in your 60s, you’re basically locked in for life.
You’re signing away any chance of innovations changing what commissions may become decades from now. Remember the world 40 years ago? Imagine what it will be 40 years from now.