Please follow MLS rules when compensating short sale processing companies - Utah

Under well-established National Association and Wasatch Front Regional Multiple Listing Service rules, all offers of cooperating compensation (Buyer Agent Commission) must be blanket offers of compensation (i.e., available to all cooperating brokers who are MLS members). The compensation offered to MLS members in the BAC section must also be "unconditional," so buyer's agents know what they will be paid prior to endeavoring to sell the property.

Conditions to the BAC, or events and other factors that may limit or reduce the unconditional offer of BAC, cannot be inserted in the remarks section of the MLS.

The only exception to unconditional compensation offers involve a short sale when the private listing remarks state that any reduction "required by the lender as a condition of approving the sale" will be apportioned between the brokers.

Some listing brokers are now hiring third-party processing companies to help with the processing and negotiations between the seller and the lender.

In these circumstances, some listing brokers have inserted the following comments in the MLS remarks: "The processing company and or the negotiator will be paid part of the commission" or
"The commission offered to the buyer's agent will be reduced by the amount to be paid to the seller's negotiator."

This practice of unilaterally inserting a change to the BAC requiring the buyer's agent to pay for third parties hired to assist the seller or the listing broker is not allowed under the MLS unconditional compensation rules. The processor or negotiator should be paid by the seller unless the buyer and/or the buyer's agent specifically agree in writting outside of the MLS to share the cost (i.e., Commission / Escrow Agreement).

One solution may be for the listing broker to reduce the amount of the BAC if the seller desires to hire a processing or negotiation company with increasing the total cost of the transaction. The bottom line is that whatever BAC is offered, this amount must be paid unless the buyer's broker specifically agrees otherwise (i.e., Commission / Escrow Agreement).

By Brad Baldwin - Legal Counsel, Wasatch Front Regional Multiple Listing Service