Short Sale Case Study
A new listing is entered into IMLS. The box “Potential Short Sale” is checked. The listing offers 5% to cooperating brokers. The agent remarks include: “Commission to be paid will be half of whatever listing agent receives.”
The REALTOR® Code of Ethics Article 3 requires the Listing Agent (LA) to provide notice to co-op broker of any change in compensation before the Buyer's Agent (BA) presents an offer to purchase.
Consider the following sequence:
Property is listed for $100,000
BA1 submits offer to LA of $95,000. LA presents to third party lien holder; who counters with “will accept, but only with a reduction in total commission paid to 2%.
BA1 withdraws. On the same day that BA1 withdraws offer, BA2 calls listing agent and says “I am bringing you an offer.”
Question – Should LA tell BA2 that the third party lien holder has rejected paying the full commission on a less than full price offer?
Question – What should LA do regarding current offer of compensation?
Question – What if BA1’s offer was full price?
Question – How should LA counsel Seller?
What advice would you give to the Listing Agent?
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