On Friday, November 26, 2009 the Tucson Association of Realtors announced a new MLS Rule. The Rule reads as follows:

Effective immediately, it is against MLS Rules and Regulations to upload ANY document to MLS that references a proposed change to the stated co-op or commission. It is also a violation to make any remarks in MLS that reference a proposed change to the stated co-op or commission. If you have listings that contain any such documents or remarks, they must be removed within 2 business days, or they will be removed by MLS and subject to a minimum $100 fine per occurrence. If your listings contained any such documents or remarks, it is recommended that you state ‘call before showing’ in the remarks to alert cooperating members that co-op or commission negotiations may occur.

All corrections must be made to our MLS listings immediately and failure to do so will result in MLS removal of the material and a $100 fine. Obviously, the Rule was created to bring a halt to the last minute renegotiation of commissions being forced into transactions by lenders when dealing with a short sale or REO property. We should all be mindful of the new rule and use it to protect our commissions in these types of sales. We would recommend that:

1. At the time of listing, forward your listing contract containing the commission to the lender in both short sale and REO transactions.

2. Reference the new MLS Rule and inform the lender that the property is being marketed subject to these conditions and that no negotiation of the commission may occur after the property has been listed. Start forcing the lenders to make their objections upfront. Your letter or email may even indicate that if the lender does not object to the listing agreement within “x” number of days, that they are consenting to the terms and conditions of the listing agreement.

3. You may also want to reference or include the FNMA policy regarding the non-negotiation of such commissions. Here is the reference for that policy:

No Negotiation of Preforeclosure Sales Commission, Servicing Guide, Part VII, Section 504.02:

Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon a
reduction of the total commission to be paid to real estate agents to a level below what was
negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales
price of the property in aggregate.  Servicers are reminded that they must continue to obtain
any approvals that may be required by interested third parties in connection with preforeclosure
sales.”