NAR has built a resource page for REALTORS® about short sales. Information is frequently updated and can be found by clicking here.
Short Sale Advisory Information for Consumers
Short Sale Disclosure
The SARMLS has adopted rules from NAR about disclosure of short sales. The section is as follows:
Section 5.0.1: Participants must disclose potential short sales (defined as a transaction where title transfers, where the sale price is insufficient to pay the total of all liens and costs of sale and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies) when reasonably known to the listing Participants.
When disclosed, Participants may, at their discretion, advise other Participants whether and how any reduction in the gross commission established in the listing agreement required by the lender as a condition of approving the sale, will be apportioned between listing and cooperating Participants.
Short Sales: When is an Offer Accepted?
The online REALTOR® magazine has an article on accepted offers for short sales (Click here to view). The SARMLS rules state:
Section 2.5 REPORTING SALES TO THE ASSOCIATION. Status changes, including final closing of sales (to include contingent offers), shall be reported to the MLS by the listing Participant by the next business day after they have occurred. If negotiations were carried on under Section 2(a) or (b) hereof the cooperating Participant shall report accepted offers to the listing Participant by the next business day after occurrence and the listing Participant shall report them to the MLS by the next business day after receiving notice from the cooperating Participant. Listings must be marked “contingent” when it is documented that all parties agree that the property will continue to be marketed and other offers will be accepted. All other listings with signed offers to purchase shall be marked “pending”.
Once an offer has been accepted and signed by both buyer and seller, a contract has been formed. The contract is contingent upon approval of the lender, but there has still been “acceptance” by the parties which is what triggers the requirement to change the status of a listing to Pending or Contingent (when it is documented that all parties agree that the property will continue to be marketed and other offers will be accepted). While this requirement can be frustrating for the parties in the short sale context, to do otherwise would be misleading, as there is, in fact, an accepted offer in place for the property.
Section 2.5.1 CONTINGENCY APPLICABLE TO SHORT SALE. Properties that are subject to a Short Sale shall comply with the disclosure provision set forth in Section 5.0.1 of these rules. Listings shall be marked “contingent short sale” if acceptance of offer is contingent upon third party approval. Listings shall be marked “pending” once all parties accept the offer and all contingencies are removed. Short Sale contingency or conditions of any term in the listing shall be specified and noticed to Participants within the next business day.