If you were offered $500 cash, would you sign a document and take it?
A real estate firm is offering homeowners some quick, no-interest cash but with a catch.
Hundreds of Maryland homeowners were enticed by this offer from MV Realty of Maryland, LLC. By accepting the cash, they were granting the company the long-term exclusive right to list their homes. And if they sell with someone else, they will owe the firm thousands of dollars.
The length of the agreement: 40 years!!
The company has locked homeowners all over the state into long-term contracts that can only be terminated by paying a “termination fee” equal to 3% of the company’s estimated home value. Many of these homeowners may have been seduced by the cash offer without fully understanding the terms of the contract.
If a homeowner or any heir violates the terms of the contract—whether on intention or by mistake—the termination fee is secured by a lien on the property. In the 35 complete agreements that can be found in public land records, in Baltimore, Maryland homeowners only received an average amount of $662.26.
MV Realty spokeswoman Diana London wrote in a statement that “the terms are, in fact, written in plain English and always signed in the presence of a notary.”
“Of the thousands of payments we’ve made upfront, only a tiny percentage of those homeowners have expressed confusion about our agreements,” she said. “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.”
The agreements have sparked a wave of legal objections across the nation. Real estate professionals claim the companies’ practices fall far outside industry norms.
Get our take in our latest episode, where Matt and I talk about the 40-year listing agreements, the Airbn-bust, and a $1.4M house full of doodle drawings.