New webcast: Ethical Considerations in Short Sales with VAR special counsel Lem Marshall

I’m getting an increasing number of calls to the VAR Legal Hotline about the legal and ethical issues REALTORS® face in increasingly-common short sales. In this brand new 29 minute webcast, I address some of the most frequently asked questions such as:

  1. Is it legal or ethical to require the seller to state that the home is a short sale listing in the MLS?
  2. What happens when a ratified contract with a third party approval clause fails because the third party rejects the offer?
  3. What are my obligations when the bank asks me to reduce my commission on a short sale?
  4. Why aren’t lenders required to pre-approve the selling price before short sale listings are entered into the MLS?
  5. Are “conditional commissions” permitted in the MLS?
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7 Responses to New webcast: Ethical Considerations in Short Sales with VAR special counsel Lem Marshall

  1. Jim Rake says:

    Lem – As you always do, thanks much for the needed advice from a legal perspective. As you’ve mentioned, the challenges with short sales are many, but these are becoming the norm and not the exception, and we must be prepared and/or armed for engagement.
    Appreciate the specifics you outlined on the financial burden the lender takes on – $58,000 or so, to own and manage a property should be a large enough incentive to opt for a short sale instead. Again, thanks for the primer – a good reminder that the challenges of managing a short sale can be minimized by being well prepared to deal with the clients, whether listing or selling agent, and the lender, who is as interested in getting rid of the property as we are.

  2. Thanks for this! And somebody thought we wouldn’t watch videos over 5 minutes.

    I watched it.

    Regarding minute 4 about not being able to require the seller to put SHORT SALE on the MLS, this was debated today at a forum with MRIS. Appears they might not be in full agreement with this rule and law.

    Sure, the seller has the right to not have his financial information made public, ie mentioning Short Sale on the MLS.

    But doesn’t the MLS have the right to say “ok, but we won’t let you list on the MLS, use Craigslist” Since the MLS can maintain that a certain level of basic information that the buyer needs, needs to be there. And it being a Short Sale is deemed important information.

    I can especially understand MRIS’s position, since you brought up the point that the information is publicly available at the courthouse. If it is publicly available, the listing agent SHOULD be required to disclose a short sale, and if the seller STILL doesn’t want that, then you can be banned from the MLS.

    Around Minute 13 you talk about the listing agent calling up the buyer agent and asking them to reduce their commission because the bank is cutting the commission. Then you stated that the buyer agent has the right to say NO (that implies the right to say YES).

    I’m no lawyer (I want to be one) but neither the listing agent NOR the Buyer agent have ANY RIGHT to discuss coop commissions since that is a BROKER to BROKER offer.

    It is my understanding that if it is AFTER the contract is ratified (by buyer, seller and bank), the listing agent even has the right to say “yes” in order to not interfere with the deal, and then AFTER the deal, sue the listing broker for the full commission.

    As for before the contract is ratified, the listing agent needs the buyer’s Broker and the listing Broker to both sign off on the reduction. (even then, I’m not sure you can do that after you publish X chickens on the MLS)

    In Va Beach a listing Broker offered X chickens on the MLS. The buyer agent put in an offer. The seller countered and lowered the buyer agent commission. The buyer agent signed and agreed to the lower commission. The deal closed. The buyer agent’s broker sued for the entire amount. The buyer buyer won. An agent can not change the commission and they have the right to not jeopardize the deal (just like a procuring cause issue, you wait until after the closing.)

    Regarding Minute 23 on proposals to not allow Short Sales to be on the MLS unless bank has approved the commission and sale. I agree, this is too harsh. I also agree that Short Sales are a great solution. But what I have a problem with is 95% of Short sale listing agents are CLUELESS. I would be in agreement that you can only be in the MLS as a SHort Sale AFTER you have confirmed that the bank is in receipt of the distress package.

    I went to a great NVAR event 2 days ago that showed listing agents how to close 90% of short sales, in LESS time than a regular listing.

    Thank you for Minute 25 where you can’t put in “50/50%” on the MLS.

    Here are the MRIS rules as I understood them from today’s event with MRIS:

    http://activerain.com/blogsview/503647/Virginia-Commissions-Offered-to

    Lem is the best!

    Frank

  3. Forgot to click, Notify me with follow up comments.

  4. Pingback: MRIS, Short Sales, Commissions, Disclosures and You! | FAAR Forum

  5. Pingback: Just Say “NO” | VARbuzz

  6. Lem, this is a great piece for anyone needing more info on short sales, anyone who is working short sales or considering working short sales. Without requiring special training to do short sales, many jumped in, I was one of them, and it makes a much tougher transaction for all when you aren’t educated. I’ve now worked short sales for a couple years and things continue to change with the banks. My first I had done in a month, I have one now I’ve worked for 6 months just closing next month. Many of my questions have been answered thanks to you!

  7. Jim Rake says:

    Melissa –
    Short Sales can be frustrating, especially with the lack of standardization and communication with banks. As all of us have found out, trying to find out where the transaction stands is sometimes tougher than pulling teeth!
    You’re right, online resources like this are great learning tools for our industry. And, Lem always does a very good job of making things easy to understand.

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