No Commission No kidding?…you've got to be kidding!?
I recently had a frantic phone call from a homeowner who was in a battle with “Buy Owner” and “MLS Realty” (who are sister companies, by the way). These homeowners had been solicited by Buy Owner to list their property in April of 2006. Now, in January, 2007, MLS Realty had put a lien on their home effective until the year 2011.
The following is an example of a scenario that I advise sellers to be very cautious about. Whether the actions of the companies involved in this scenario are illegal or fraudulent is a matter for the courts. But in any case, their tactics and business practices as described and documented by the homeowner, are bad for the consumer. Buyer beware:
- Homeowner contacts BUY OWNER and engages in a meeting with a BUY OWNER representative, for the purpose of possibly using the company to list their property with what is known as-according to business card: “An Advertising & Marketing Company.” The business card shows a title for the sales person as “Advertising Consultant.”
- Homeowner simultaneously gets solicited by the SAME agent, who also has a separate business card for MLS Realty-according to card: “A Licensed Real Estate Company,” to do an MLS listing package. His title on this card is “Florida Licensed Real Estate Agent.” This company is in the business of listing properties on the MLS for a commission.
- An EXCLUSIVE RIGHT OF SALE LISTING AGREEMENT is then entered into between the seller(s) and MLS Realty which allows MLS realty to charge a commission when the property sells (regardless of the procuring cause).
In the case of a true “For Sale by Owner” the seller pays NO COMMISSION to a listing agent if they sell the home themselves. So, it's “No Commission, No Kidding” as long as you don't sign up for the other program they market to you once they get in front of you. (The FTC might consider this business practice to be “Bait & Switch” which happens to be a form of fraud. See below for FTC statutes relating to this type of fraud).
- MLS Realty also charges seller(s) a $275-$299 “administrative fee” at closing on top of their commissions.
- Addendum to MLS Listing Agreement also has a clause which allows MLS Realty to lien the property for the amount of the commission and costs owed. *I find this interesting since it is illegal for a real estate licensee to place a lien on residential property in the state of Florida.
The homeowners in this particular scenario told me that they didn't realize what they were getting into and never understood that they were doing business with two different companies…They claimed that the representative “just pointed to the contract and said sign here.” They admitted in a letter to the Better Business of West Florida, that this was “the first time we engaged in the selling of a home, we were very naïve to what we should have been looking out for and so the representative mislead us on the terms of the contract not emphasizing anything about a lien just pointing out where we should sign…”
Our advice: Be very wary of any company who presents themselves as one entity providing one service but then advises you to engage in a relationship with another completely different company for a completely different service altogether-especially when they are represented by the same individual.
To read more on this topic, simply type in “Buy Owner law suits” in your Google search bar.
From the Federal Trade Commission website:
Sec. 238.2 Initial offer.
(a) No statement or illustration should be used in any advertisement which creates a false impression of the grade, quality, make, value, currency of model, size, color, usability, or origin of the product offered, or which may otherwise misrepresent the product in such a manner that later, on disclosure of the true facts, the purchaser may be switched from the advertised product to another.
(b) Even though the true facts are subsequently made known to the buyer, the law is violated if the first contact or interview is secured by deception. [Guide 2]