Listing a Short Sale in the MLS
Prior to agreeing to a listing, I have ascertained that my client is upside down on her house and therefore any contract and compensation will be subject to lender approval. What information do I include in the MLS when I list the property in the system?
The MRIS Rules and Regulations state that the offer of compensation shall be specified in the system. It goes on to state that the MRIS system will only accept listings (three types are identified as acceptable) where the Seller has authorized the listing broker to offer cooperation and compensation to other competing brokers. But you already knew how to list a property for sale in the MRIS when there are no issues of future modification of offers of compensation.
In response to the increase in short sales, our regional MRIS just added two pick list items to assist both listing and selling agents. Short Sale has been added under the Current Financing/Loan pick list. Selecting this option will disclose to other agents that the property is subject to a short sale and therefore any contract will require lender approval. Additionally, MRIS has added a field which allows listing agents to inform others that the offer for cooperative compensation is also subject to third party approval. In the event your listing is a short sale, you can now select from the Contract Info Pick list the following option: Comp-Subject to third Party Approval.
However, before you select either options, consider your clients privacy and the confidential nature of the information you would be disclosing. Article 1 of the Code of Ethics states that REALTORS® pledge themselves to protect and promote the interests of their clients. If you select an option in your listing which indicates that it is a short sale, or is subject to lender approval, you could be communicating that you have a distressed seller which may, in turn, affect the offers your client will receive. However, if you do not disclose that the offer of compensation is subject to lender approval, you may violate Article 3 of the Code of Ethics down the line. Before you put a listing on MRIS, discuss these factors with your client and obtain from your client approval to select options from the pick lists which reflects that not only the contract but also the offer of compensation is conditioned upon third party approval.
For further information on the use of MRIS in short sales, please refer the MRIS website.