Real Estate Ramblings...Short Sales?

Short Sales - What are they and what does it really mean.

Short Sale Listings: In instances where the listing broker becomes aware that the listing price may not be sufficient to permit seller to fully satisfy all encumbrances and pay seller’s closing costs, including the listing broker’s offer of compensation, 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 (1) business day upon receipt of knowledge. Such disclosure may be included in the “Realtor Only Remarks” and the “Public Remarks” 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 Remarks” and “Public Remarks” Sections of the MLS listing and in either the Contract for Sale and Purchase or an addendum thereto. This disclosure must be word-by-word and disclosed at the time of input, if known, or within one (1) business day upon receipt of knowledge.
“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.”
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.
If you have any questions please email or call me. As you can see our position is disclosure and that the coop compensation to the Selling Broker can't be negotiated down by the Listing Broker's office. Fact is a third party is not a party to the contract and can't do that either. The offer of compensation is Unconditional. The third party approval is nothing more than a contingency like any other contingency that needs to be met by the contract terms.
If the third party does not accept the offer as presented they will counter to the listing broker as to what they will receive and just like a price adjustment is made to a contract if the property does not appraise then the contract price is increased to meet the cost of selling the property. The buyer can then accept or reject the counter not unlike the seller can accept or reject the lowering of a price to meet the appraised value.

I hope this helps....