I've had several inquiries regarding short sales so I thought I would share what our Mid Florida MLS has commented on with short sales and disclosures.
The National Association of REALTORS® has approved a new permissive MFR rule regarding the advertising of "short sale" listings in the MLS. At this time NAR policy requires some provisions of our new rule below to be permissive rather than mandatory; however, we hope that the permissive provisions of this rule will be exercised by all Participants of MFRMLS as a "best practice" and in a spirit of cooperation with, and full disclosure of actual short sale circumstances to, all Participants, buyers, and the public at large.
The mandatory provision of this new rule requires Participants to change the status of a listing from "Active" to "Pending" when a contract which is subject to the approval of court, lenders, or other third parties, is executed by buyer and seller. Failure to timely update will result in the imposition of a fine. (This new rule does note change MFR's rule relating to how listings of properties subject to a "Right of First Refusal" clause may be continued to be reported in "Active" status after a contract has been signed.)
If the Participant follows the new rule and disclose the "Short Sale Circumstances" the following language must be used "Listing price may not be sufficient to cover all encumbrances, closing costs, or other seller charges and sale of Property at full listing price may be conditioned upon approval of third parties. Call for details."
The new rule is as follows: Section 1C: Short Sale Listings: In instances where the listing broker becomes aware that the listing price may not be sufficient to permit the seller to fully satisfy all encumbrances and pay seller's closing costs, including the listing broker's offer of compensation (a "Short Sale Circumstance"), the listing broker may:
(1) Obtain seller's informed written consent (in either the listing agreement or an addendum thereto) to disclose the Short Sale Circumstance to cooperating brokers, buyers and the public;
(2) Clearly and promptly disclose the 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 business day upon receipt of knowledge. Such disclosure may 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 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. In making the permitted disclosures the following language must be used:
An offer of compensation to cooperating brokers which states that it may be adjusted after execution of a contract for sale and purchase by a third party without the consent of the cooperating broker, is not an unconditional offer of compensation under these rules. 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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