Compliance Letter from NNRMLS

How many agents received the following letter this week from Linda Conger, MLS Policy Administrator, of the NNRMLS?

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April 14, 2008

Dear Member,

Recent NNRMLS policy changes regarding net compensation, listing compensation “subject to” and short sale disclosures went into effect on April 1, 2008. During the month of April we are sending courtesy notices to allow members to correct their listings prior to the enforcement date of May 1, 2008.

Please note that your listing #xxxxxxxxx may not be in compliance with one or more of the new policies. We hope you will take advantage of this courtesy notice and window for correction by making changes to your listing no later than May 1, 2008.

Please review your listing specifically for private remarks, special conditions of sale, compensation to buyer’s broker (CBB) and appropriate status. What to look for:

CBB: this is the amount that the listing broker is agreeing to compensate the buyer’s broker if the transaction is successful. The amount that shows in CBB is a contractual agreement between brokers and is sacrosanct with the exception of subject to court approval.

This amount cannot be subject to anything but court approval. Notations may be made in the private remarks that the compensation is %X or $YYYYY or a (you define the split or amount) of whatever the lender pays, whichever is greater – or some similar notation.
This amount cannot be changed to a “net” amount after concessions. CBB is CBB. If your client will not pay compensation on concessions, you may want to consider offering a dollar amount vs. percentage, change your listing to sliding scale with a clear definition in the private remarks of how the scale will work, etc.

Special Conditions of Sale: Listings that are short sales, subject to court approval, Bank owned, none or other, etc. must be correctly noted as such.


Private remarks:

*any comments that note that the compensation is subject to the approval of a lender (or any other 3rd party except court approval) must be updated. (see CBB above)

*any comments that state that compensation will be “net” after concessions or for any other reason must be updated. (see CBB above)


Status:

*Short sale listings with an accepted offer by the seller (not lender, but the property owner), must be reported as active-pending/short sale within 2 business days of the seller’s approval.

*Listings with an accepted offer by an authorized court representative/trustee, must be entered as “active Pending” within 2 business days of the authorized representative’s approval.

Please discuss the changes in private (or regular/extended MLS remarks if you have noted anything there) with your broker to be sure you are also in compliance with his/her office policies!

One last reminder: Compensation (CBB) and Private Remarks are considered confidential information – there is no need for printouts with this information to be submitted to a lender – there are several other reports in Paragon that will provide the full property information without compensation and private remarks.

Linda Conger
MLS Policy Administrator
Northern Nevada Regional MLS
Voice: 775.823.8838
Fax: 775.823.8809
Email: Linda@nnrmls.com
CC: Listing Broker
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If you currently have a short sale listing, you probably received one of these "courtesy notices". I heard that NNRMLS sent out 900 of these. So, I'm curious how are agents are going to respond.

It sounds like from the letter we can no longer specify a net commission on a short sale listing, because the commission is likely to change. And as those of us who have been through the short sale process know well, we will not know if the bank will approve the specified commission until after we receive an offer; submit it to the lender; and then receive the lender’s decision; a decision which usually entails reducing one’s commission.

And don’t think that the disclaimer recommended by the NVAR’s legal counsel “commission subject to third-party approval” will protect you in this regard. NNRMLS apparently doesn’t recognize that advice.

So, for everyone who is currently using the “subject to” verbiage recommended by our legal counsel, you will have to modify your listing remarks; at least according to NNRMLS. See “any comments that note that the compensation is subject to the approval of a lender (or any other 3rd party except court approval) must be updated”, in the letter above.

But to what? NNRMLS doesn’t explain what verbiage would comply with their standards.

If anyone has an idea on how to address the short-sale commission conundrum WHILE remaining in compliance with NNRMLS’s policy, I’d love to hear it.