The fact that a property will be a short sale has to be disclosed in the MLS.  The simplest way to disclose a short sale is to say something like “the sale is contingent on lender approval of a short payoff of the existing loan.”   There are also all sorts of other phrases to disclose this. 

 

What about commissions?  Since lenders frequently try to cut the commission, how does the listing agent deal with that possibility?  If you specify a certain commission to be paid to the agent for the buyer, you will have to pay that amount at closing, unless the buyer’s agent voluntarily lowers their commission.   If you want to be able to adjust the commission, specify in the listing that the commission is subject to the lender’s approval and may be renegotiated.   The listing agent can also specify that the commission to the buyer’s agent will be 50% of the total commission approved by the lender. 

 

Some Realtors feel that the fact that a property will be a short sale should be put in advertising.  There is not enough room in most ads to put in every material fact about the property, so I do not see how that should be required.  You do not have to put all the required disclosure statements in your advertising, so you should not be obligated to say it is a short sale. 

 

Most short sales are sold “as is” because the bank wants to get the amount shown on the closing statement (HUD) that is presented at the time the lender approves the sale.  Since the seller usually has no money, any repair costs would come out of the proceeds of the sale, reducing the payment to the lender.  Do you have to put “as is” in the MLS and the advertising.

To set the proper expectation, you need to disclose that the house is a short sale.  It does not make a pleasant surprise.

 

For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-dos-and-donts/do-disclose-short-sales-in-the-mls-and-advertising/.