REB 128: 40 Year Listing Agreements?!?!?

The State of Ohio is one of a number of states that have recently issued an injunction to ill-famed MV Realty to release people from a 40-year listing agreement.  How did this happen?

Transcript

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All right, welcome back to real estate bites, everybody. Uh this week we're coming at you live. The last couple weeks, I had pre-recorded stuff for you, but this week I'm coming at you in real time. Okay, so what are we talking about this week? The state of Ohio is one of a number of states who have recently issued an injunction to uh ill-reputed, uh recently filed for bankrupt or bankruptcy, uh Florida-based MV Realty. MV Realty was there, this injunction was done and they've been sued for deceptive practices. So what they would do was they would lock homeowners into 40-year listing agreements. Um, and so what the state has done, along with a slew of other states where this is happening, up and down the eastern part of the U.S., the state is forcing MV Realty to offer a certain window of time for these homeowners to get out of that contract. You're gonna have to pay a$75 recording fee with your local county recorder, but you can get out of it. And if you want to know the scale of what happened, I mean, this isn't a lot in the scheme of things, but they got nearly a thousand people with these 40-year listing agreements. And so it's specifically 947 letters that will go out. I'll I'll give you a look here at this little letter that the state is sending out to people. This is from Attorney General uh Dave Yost, and this little note goes out here to people who are locked into these agreements. Um, they got the records from NB Realty, and MB Realty again is offering a way out of that 40-year listing agreement. So obviously, this is an unethical practice, right? Um, you know, I mean, they're trying to lock people up for the long term. You know, there are statistics that say people don't even remember who their real estate agent was a year after they bought the home. They remember the brokerage, they remember the cost, they remember how they felt during the experience, but they just can't name that agent. And that's because the agent isn't following up. But that's a whole different topic, whole different thing to talk about. Um, so obviously, MV Realty knows that people are going to forget, and clearly they were tracking these and they were trying to enforce this. So people forget, they sign this 40-year listing agreement, and you know, 10 years later, 13 years later, they decide to sell their home, they sell, MV Realty sees it, they sue to collect the commission that they would have been owed had they been given the opportunity to list and sell that property, right? So a deceptive practice, um, an unethical practice for sure. But look, there's another side to the story, and that is who is signing up for a 40-year listing agreement? Why are you doing this, folks? Now, I mean, I can only imagine, you know, maybe there are some folks who uh they don't really know what's going on and they sign on, or maybe there are folks who are intimidated by the sales agent and they sign on. But I'm pretty sure that most of what goes on is that sales agent, um, they go through this contract, they don't necessarily explain to you clearly that you're signing on for a 40-year agreement. They just you you sign on now. They were inducing this agreement with cash-out payments, okay? They paid people between three and five grand, obviously, depending upon the size of the home and the resale value, they were paying people between$300 and$5,000 to enter into this 40-year listing agreement. So I have to imagine a good number of people understood why is this company offering me money why other companies don't? Well, because it's for a 40-year agreement. So if you knowingly signed on because you needed to take that cash, um, you know, and and you're getting this get out of jail free card, well, God bless you, you got lucky, right? But if if you didn't, right, if if they went through this listening agreement and wasn't clearly and thoroughly explained what you were getting into and you signed on to this agreement, um, you know, it's kind of on you too, right? So the message and the moral of this story is when you are being consulted, when you're in a consultation about something uh as big of a deal as selling your home, purchasing a new home, something like that, you need to fully understand what you're getting into. And I'm gonna tell you right now, if you're being consulted with, if you're being explained to by some professional what's going on and you don't understand it, that is a red flag. If it's explained to you and it seems so complex and confusing, that is a red flag that that person is not being entirely honest, and you should walk away and find someone who can explain it to you, okay? Another thing, read the freaking contract. I know it's boring. I'm a professional, I work on this stuff every single day. It's boring, right? I I remember in early on in consultations, um, maybe I did this a couple times. I would start to read the contract line by line. We wouldn't get through half of page one before I could see people's eyes glaze over, their jaw goes slack, their fighting drool, their mind is clearly on the ball game later on today, or what are we going to eat for supper? They're not listening anymore because it is really boring. So I spent hours trying to figure out exactly how I can summarize the major parts of the contract in language that doesn't lull people to sleep, right? That keeps them engaged and understanding. And I tell them all the time, you know, there's a whole lot of words in here that I'm not going to read because I need you to stay with me. If you have any questions, please ask, you know, but I encourage them to read it. You should read the contract. You should. And I know we all have like EULA agreements and EULA licensing agreements when we sign up for a phone. I don't read that either, right? But it's all generally the same for the phone. When you're selling your home or when you're going to purchase a new home, you need to read that five to ten page contract, word for word, and do your damnedest to understand what's in there. And if you don't understand, you need to pick up the phone and call your agent, your representative, and ask them what it means, what the consequences are. Okay. Super duper important. So for agents, right? For agents who are out there, if you've sold five houses or more and you don't know your contract, shame on you, man. That is bad, bad news. Because if you are practicing real estate and you're selling homes and you don't know what's in that contract and you can't explain what are in the contract documents that you're having your people sign, you could end up yourself in very, very hot water and subject to a lawsuit. And you know, even worse than that, you could put your client in very hot water or cost them lots of money. And that would be a damn shame. All right. That that is something that you should be ashamed of. And so you got to read the contract docs. Again, I know they're boring. There's nothing exciting about them at all. But when you're talking about transactions that are hundreds of thousands of dollars, you need to understand everything that you are obligated to do. You need to understand everything that the other side is obligated to do to you or for you, and you need to understand what the agents are obligated to do, right? Um, so for those folks who are getting this get out of jail free card from Envy Realty, good on you, good for you, God bless you. If you signed up because you needed to take quick cash from them, um, you got you got them, right? You got lucky on this one. Um, if you signed up because you didn't know what you were doing, um, and you didn't bother to ask, and you didn't read the contract before signing and didn't understand, then you know, you need to change some practices about the way you do business yourself. All right. So that is my spiel for today on MV Realty and how important it is to know what you're signing up for, especially when you are purchasing or selling a home. And we it's been a couple weeks since we've gone into local statistics. So we're gonna get into that right now. I know everybody's thrilled with this stuff, but uh we're we're there are some interesting things that we are uncovering by tracking these stats. So let's jump right into it. Here we go. Uh, episode 128 here. Uh, this morning there were 420 single family homes and condos for sale. I only use these two categories. I don't do multifamily, I do not do mobile, uh mobile, mobile manufactured homes when I'm looking at these numbers uh because single family and and condos are the vast majority of not only the actual housing units that are out there, but it's the vast majority of the housing units that we are transacting with. When you're looking at the at the retail um housing market, you're you're really talking about single family homes, right? And condos you can throw into that group. Um last week there were 53 homes closed and sold in Lorraine County. The median square feet of those homes sold was 1,684 square feet. Median purchase price was$250,000. The median square foot price was$159.24. So we got a couple weeks left before Q1 wraps up entirely. And you know, we are we've seen a correction. So when we wrapped up the year, we saw a correction from Q3 2025. You had an average median square foot value of 175.54, and it ended up in the final quarter of the year with an average median square foot of 167.19. So a large correction from quarter to quarter. I mean, we had seen it go up, up, up, up, up, and then finally we corrected back. I think we're gonna see yet another correction when we wrap up Q126 here in a couple weeks. And obviously, we'll do the stats then, we'll see how that plays out. And I gotta tell you guys, I don't see that trend um changing. I really don't. I think we're gonna see housing prices probably stabilize um through the summertime, not go up or down because folks, demand is definitely cooling. The the the the story is, it always has been since I started doing this. When I say doing this, I mean real estate bites. Um and this since COVID, the story has been inventory, right? A lack of inventory is why prices are where they are today. We couple that with our government purions of dollars of funny money into the economy. That also inflates things as well. But the continued price increases that we've seen since the interest rate shock in 23 or 24, um, the can it's because of low, low inventory. Now, demand has cooled significantly since last fall, and we saw prices, they were continuing to go up, but they started to slow down. And now, as we've seen over the last quarter of 25 and the first quarter of 26, prices are correcting. Now we're about to enter into the selling season. People more inventory is going to come on the market. More people are starting to shop right now. Uh, we're getting busy. Uh, it's busy. Uh, I think we might see this column begin to creep up again in numbers, but I would be surprised if I see, you know, going into Q2 and Q3 of this year, if we see these median square foot numbers really start to average out above this number and start going above it. Because again, demand is cool with everything geopolitically going on right now. Um, I think people are scared. Not to mention, from the macro experts whom I listen to, I think we can expect more inflation. Obviously, you see it at the gas pump, but you know, that's just the first thing. Energy is the most basic and necessary commodity in our lives. It affects everything. When the price of energy goes up, the price of everything goes up because it takes energy to produce, to transport, and to consume, right? So when gas and oil prices go up, well, it's gonna cost more to ship things, it's gonna cause prices of everything to go up. Um, you know, you're gonna see food prices start to hike again. And the whole point of saying this stuff is as things begin to inflate more and wages do not follow suit, right? That's less buying power that the average American has. And so that's gonna cool demand even more. And as we see here in column I, we've also seen a reversal in course on these interest rates. They were going down, down, down. I mean, we we are here bouncing between six and a half and six and a quarter, all of Q4 2025. Then we got down and we're under six and a quarter through most of Q1. And now we're starting to see them right here the past couple weeks. They're coming up again. So as interest rates go higher, as the price of everything inflates again, as purchasing power diminishes yet even more for the average American, I think we're gonna see demand in housing cool even more. And this may remain flat through the selling season, the median square foot values. But if this sustains, um, if these energy problems, if a war in Iran sustains, we're probably gonna see another correction in housing over the end of this year and getting into 27. All right, so the average days on market for homes that sold last week was 33. We just went over uh the average, the 30-year note on a conventional mortgage this morning was 6.43%. And the big sale last week was just over a million dollars in North Ridgeville. This was new construction. There wasn't even a rendering, it was just like a sketch. So I got nothing to show you by way of beautiful pictures of what that million-dollar home in North Ridgeville cost or look like, rather. So that's it, ladies and gents. That wraps up episode 128 of Real Estate Bites. As always, I appreciate you guys coming on, giving a listen, listening to real estate news. Um, if you like what you see, go up here, snap that QR code, subscribe, uh, spread this information, share it with friends and family. And uh, as always, take care of yourselves, take care of one another. I love you people. I'll see you next week.