The sale of any property that requires some form of "third party approval" is a more complex transaction. With the Foreclosure, Short Sale, Bank Owned epidemic many transactions will require some level of third party involvement. It is imperative that Sellers, Realtors and other professionals be adamant about disclosing the important special circumstances in a transaction.

By definition a Short Sale transaction will require the Sellers Lender to approve the sale and accept a short payoff of the Sellers existing mortgage. If you are the person selling the property and advertising a price, it would be important to let the general public know that the property price might require "Lender approval".

The laws of disclosure in the sale of goods and services are defined by Federal, State and local laws often referred to as "Fair Business Practices Act" or "Deceptive Business Practices Act". The intent as it relates to public advertisement of goods and services, is to not deceive the public. Also to properly inform the public about what is for sale.

Listing Agreements
Listing Agreements should contain the following basic information:

"SALE MIGHT REQUIRE LENDER AND SELLER MUTUAL AGREEMENT" This language specifically includes the seller in the decision. Many firms are using "lender approval" but what if the lender approval is unacceptable to the Seller, or includes a promissory note or the Seller bringing money to the closing table.

"BROKER CAN ADJUST LISTING PRICE OF PROPERTY AT THEIR DISCRETION. NO FURTHER NOTICE REQUIRED. Get the Sellers consent to move the price around. During the negotiations pricing adjustments might be frequent, this will speed the process.

"COMMISSION AND FEES TO BE PAID BY LENDER AT CLOSING INCLUDING $1,500 PROCESSING IF REQUIRED" Contrary to many standard Listing Agreements it is unfair to bind the Seller to your commission. Your fees will come from the transaction only if the Lender agrees to give them to you. In addition our processing fee will also appear on the HUD, if the Lender agrees to pay it.

MLX, MLS, NLS and other Listing Services
Your disclosure is doubled with a listing service. The information that you enter on a listing service may be distributed to the General public and or Real Estate Agents. If you advertise an item for sale at a price it must be able to be purchased at that price. Or the advertisement must contain disclosures that explain to the General public how it can be purchased.
"REQUIRES THIRD PARTY APPROVAL" is now common language that lets a Buyer know there are other factors to achieve the advertised price.

When the listing service requires a commission plan be advertised it is important to disclose that the commission is also subject to change. In any transaction requiring third party approval, the commission paid to Real Estate Agents will also be subject to approval. If your advertised commission rate is 3%, the disclosure to Real Estate Agents might be: "COMMISSION IS SUBJECT TO THIRD PARTY APPROVAL AND COULD BE REDUCED"

Print Media
Print is dangerous, because once published it can last forever and not be retracted. Go overboard in print a Short Sale disclaimer on an advertised price might look like this: "SHORT SALE LIST PRICE IS AN ESTIMATED MARKET VALUE, THE ACTUAL SALE PRICE WILL BE DETERMINED BY THE LENDER"

*The information contained in this website is for informational purposes only and is an opinion of the Author.
There are no warranties or guarantee's, implied or expressed. Consult your Accountant and or Attorney for advice.