Article 4.1-1C: Short Sale Listings
Posted by MFRMLS Wed, 06 Feb 2008 19:49:00 GMT
In instances where the listing broker becomes aware that the sale price may be insufficient to pay the total of all liens and costs of sale and the seller may not be able to bring sufficient liquid assets to the closing to cure all deficiencies (the Potential Short Sale Circumstance), the listing broker shall:
(1) Obtain seller’s informed written consent (in either the listing agreement or an addendum thereto) to disclose the Potential Short Sale Circumstance to cooperating brokers, buyers and the public;
(2) Clearly and promptly disclose the Potential Short Sale Circumstance to all cooperating brokers and, when and if appropriate, disclose that the sale of the listed property may be conditioned upon the approval of a court, a lender, or other third party. Such disclosures may occur at any time, but it is suggested they occur at the time of MLS input, if known, or within one (1) business day upon receipt of knowledge. Such disclosure must be included in the "Realtor Only Remarks" and the Public Sections of the listing. If after the initiation of negotiations the listing broker receives knowledge of the existence of a Potential Short Sale Circumstance, or that the sale of the listed property may be conditioned upon the approval of a court, a lender, or other third party, then such disclosures may be made in writing in the "Realtor Only and Public Remarks" Sections of the MLS listing and in either the Contract for Sale and Purchase or an addendum thereto. All confidential disclosures and confidential information related to short sales must be communicated through dedicated fields or confidential "remarks" available only to participants and subscribers. In making the permitted disclosures, ONE of the following provisions must be used:a. OPTION ONE: If the listing Broker DOES NOT want to bind the cooperating Broker to acceptance of a reduced commission amount as determined by seller’s lender(s), then the following remarks should be used:
"Listing price may not be sufficient to pay the total of all liens and costs of sale, and sale of Property at full listing price may require approval of seller’s lender(s)."
b. OPTION TWO: If the listing Broker DOES want the cooperating Broker to be obligated to accept a reduced commission amount as determined by seller’s lender(s), then the following remarks should be used:
"Listing price may not be sufficient to pay the total of all liens and costs of sale, and sale of Property at full listing price may require approval of seller’s lender(s), and such approval may be conditioned upon the gross commission being reduced."
Although it is not mandatory under these Rules, MFRMLS considers it a best practice under the above Option Two, for the listing Broker to also disclose in the listing how any reduction in the gross commission will be apportioned between listing and cooperative Brokers. IF THE LISTING BROKER ELECTS NOT TO DISCLOSE TO A COOPERATING BROKER HOW ANY REDUCTION IN THE GROSS COMMISSION WILL BE APPORTIONED BETWEEN THE BROKERS, THEN THE LISTING BROKER WILL BE OBLIGATED TO PAY THE COOPERATING BROKER THE COMPENSATION STATED IN THE LISTING. TIMELY DISCLOSURE OF THE MANNER OF APPORTIONMENT OF ANY COMMISSION REDUCTION MAY BE MADE BY EITHER PLACING THE DISCLOSURE IN THE LISTING OR PROVIDING THE DISCLOSURE TO THE COOPERATING BROKER PRIOR TO THE COOPERATING BROKER PRODUCING AN OFFER OF PURCHASE.
An offer of compensation to cooperating Brokers made in a Potential Short Sale Circumstance which states that it may be adjusted by a third party after execution of a contract for sale and purchase, is an allowed exception to the general rule that offers of compensation must be unconditional.
Other than as permitted in Section 1.(C)(2)., compensation may not be discussed in any field other than the designated "Compensation" field. Compensation must be listed as a dollar amount, a percentage, or a combination of both.
Contracts which are subject to approval by a court, lender or other third party must be reported as "pending" consistent with Article 4 Section 15 of these Rules.
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