Vietnam veteran James Heath, 78, isn’t quite sure how he got involved in a 40-year real estate contract.
The company, MV Realty, was introduced to Heath through a telemarketer.
“Most of them actually were elderly that you would get over the phone,” said a whistleblower who used to work for the company.
Telemarketers at Florida-based MV Realty pushed 40-year exclusive right-to-list agreements.
It means if Heath were ever to sell the property over the next 40 years, he’d have to use an agent chosen by the company.
What he got in return was a little more than $2,200.
“I thought maybe it was a scam,” said Raven Lampkin, Heath’s daughter, about the deal.
In Washington, what MV Realty is doing is completely legal. The company has signed up owners in more than 290 homes in the Puget Sound region.
But its tactics and contracts face scrutiny in this state and are under investigation in Georgia, Florida, and North Carolina.
“I thought it was wrong because we were to bait people,” the whistleblower said. “We were to be aggressive in our approach. It was a lot of high pressure for anybody that we called.”
She said the company takes advantage of the elderly.
MV Realty denies that, saying it uses a transparent process, adding, “We do not cold call and only reach out to prospects who have opted-in to receive information from us via our website or a partner website.”
“It seems to be a lien because it runs with the land and it’s a payment obligation,” said Steven Bender, a professor of law at Seattle University. “And if that’s not a lien, I don’t know what is.”
Bender says if Heath wants to choose his own agent, he has to pay MV Realty a 3% penalty, or $22,600. Also, if he terminates the contract early, there’s the possibility the company can determine that home’s value.
“So who knows what will be seen as reasonable by a company that has the right to peg your value and has a financial incentive to peg it as high as possible,” Bender said.
Finally, if a customer dies, the heirs have 10 days to transfer the deal or they may have to pay the 3% penalty.
In response, MV Realty says the contract is not a lien but rather a memorandum that “serves as a public notice of the homeowners’ commitment to give MV the opportunity to represent them in the sale of their home.”
KIRO 7 took our findings to state Sen. Mark Mullet from Issaquah, the chair of the Senate Business, Financial Services & Trade Committee. He will hold a hearing on this business practice next month.
“I think our job is to maybe put in some protections so people who might be in a difficult time in their life financially are making long-term decisions that don’t come back to bite them later on,” Mullet said.
In the end, fortune favored Heath.
His daughter happened to stop by his home on the day of the deal. She quickly moved to have it canceled in a three-day rescission window all customers are offered.
“Any number of things could have happened, could’ve transpired that could have delayed my becoming aware of it. And I wouldn’t have been able to respond in time,” Lampkin said.
MV Realty response
Mr. Heath is a 78 year old veteran. He signed a deal with MV Realty in March. He says the company failed to go through the contract with him. He says he did not know of basic elements of the deal. His daughter found out that he signed it and facilitated getting it cancelled.
The two homeowners who canceled and the homeowner who signed all three had the opportunity to rescind their contracts.
Q: Does MV Realty use high pressure tactics to get prospective customers to sign up?
No; we do not. We do not cold call and only reach out to prospects who have opted-in to receive information from us via our website or a partner website. And then, our licensed real estate agents follow a fully transparent process in explaining our Homeowner Benefit Program to homeowners and providing written disclosure in plain English.
Q: How does MV Realty find its customers?
Our customers find us - they sign up through our website or social media or find us searching for help selling a home or through partner websites.
Q: Does MV Realty focus on seniors and the elderly as prospective customers?
No - we treat all incoming queries as equal and in fact, have no knowledge of a customer’s age or financial history when we get in touch.
Q: What is done to ensure that customers know what they are signing?
We put a great deal of effort into the initial meeting and the process surrounding our agreement, and the customer is an active participant in the process. The company has a strong commitment to consumer disclosures and is constantly adding to them. Some of these disclosures include, but are not limited to,
· We suggest that the homeowner have someone else present.
- Our licensed agents and brokers are trained to explain it in detail, including the 40-year term and 3% termination fee, and the filing of the memorandum, all in bold.
- The terms are, in fact, written in plain English, bolded, and always signed in the presence of a notary.
· We offer the homeowner the right to rescind the agreement within three days.
· The same disclosures are again emphasized in a single page leave-behind document signed by the customer.
· Additionally, the company’s website prominently displays these same key program features. As well as an extensive FAQ section. Both are hyperlinked for you to see.
Also: we understand it may be unpopular to side with a real estate company against consumer allegations but please consider this point of view – we are not anti-consumer and not trying to pull a fast one. We have designed a new real estate business model that has us investing in homeowners by providing them with upfront cash payments – in exchange for future real estate listings – instead of our investing in real estate offices, advertising and traditional marketing. Of the thousands of payments we’ve made upfront, only a tiny percentage of those homeowners have expressed confusion about our agreements. And we work hard with each homeowner, when those situations present themselves, to try and refamiliarize them with the agreement they signed and how we can make it right together. Unfortunately, at times, those conversations become contentious even as we act in good faith to try and resolve them.
Q: How long is the cooling off period?
We offer the homeowner the right to rescind the offer within three days.
Q: How does MV Realty find its customers for its call lists?
We contact people who have opted in for information about selling a home.
Q: How does it determine how much to pay a customer?
The payment is based on the appraised value of the customer’s home; our offers range from $300 to $5,000.
Q: What measures are in place to make sure salespeople are not using high pressure tactics?
Our agents are trained carefully and do not use high-pressure tactics.
Multiple real estate experts have said the MV Realty contract really acts as a lien on the property.
Q: Is the contract or other documents filed with county Recorders acts as a lien?
What is filed is a Memorandum, which is different than, for example, a Lien, which is a legal tool used to pursue debt. The memorandum (not a lien) serves as a public notice of the homeowners’ commitment to give MV the opportunity to represent them in the sale of their home. This is to protect MV in the event a homeowner attempts to sell their home without allowing MV the opportunity to be their agent. It does have to be acknowledged and removed if a customer decides, for example, to get a loan to renovate their home. The document is removed from the customer’s file, then replaced as soon as the loan is granted. We work with each homeowner closes when they are facilitating those type of requests to make sure we address their needs quickly.