- February 13, 2010
- Posted by: Christopher Hanson
- Category: REO
MLS Listings on Net Sale Price
The bank wants to maximize its money on the sale of an REO property. It also wants your best efforts to sell the property. So, it will try to get you to agree to a commission on a NET sales price. Or, at the last minute, once you’ve presented an offer, then banks says “OK, but we have to cut the commission.”
It’s happened so often that MLS rules have been instituted with respect to how you split commissions when a bank demands a reduction. Most MLS rules require either a percentage of the GROSS selling price, or a fixed dollar amount be shown as compensation to the selling (buyer’s) office.
What to Disclose
We all know that banks are exempt from having to give a TDS to a buyer. Banks are also exempt from NHDs, Mello-Roos, Supplemental Property Tax, Military Ordinance, Airports, Industrial Zoning and Private Transfer Fee disclosures as well.
Banks still have to provide disclosures of Natural Hazard Zones (not the NHD form mind you, but the zones), and the Megan’s Law, Lead Based Paint, Smoke Detector, Water Heater and Meth Labs, FIRPTA and HOA disclosures as well. Banks also must disclose anything that materially affects the value or desirability of the property.
What about things like the Seller Property Questionnaire, or the Statewide Buyer and Seller Advisory or the HOA documents? What about them? The bank has no duty to provide them. And often doesn’t.
Brokers, by the way, still have to give an Agency Disclosure form to both the bank and any buyer, as well as a TDS. You read it right. An agent still has to complete that reasonably competent, diligent, visual inspection of the accessible areas, and disclose what was observed that might materially affect the property’s value or desirability. Selling agents [representing the buyer] have an even higher level of inspection and disclosure duty.
What does the poor broker/agent do when the bank refuses to comply with these regulations? Document the file. Fill it with a paper trail that shows how much and how often you tried to get the bank to do so. Then make sure the buyer knows that the bank hasn’t given over the required and recommended disclosures. Get an acknowledgment from the buyer that he/she has been so notified, and elects to proceed with the transaction anyway. The best of all worlds is to get a waiver from the buyer of any claims the buyer might make against the broker/agent as a result of the bank’s refusal to comply — in advance of the sure-to-follow claim.