Question: I represent the buyer in a transaction. The preliminary HUD sheet indicates a lower amount of commission than what I had calculated based on the gross sales price of the house. I call the settlement agent who informs me that the commission is to be paid on the net sales price. I review the short listing in the MLS and find no indication that commission is to be paid on the net sales price. What is a net sales price? Where is it indicated on the MLS listing?

 

Answer: The MRIS rules and regulations state in Section X:

“Sec.2. Compensation specified on listings filed in the service shall appear in one of three forms:

a) by showing a percentage of gross selling price

b) by showing a definite dollar amount

c) commission may be paid on Net Sales price (Sales Price minus seller concessions) or on base price in new construction if specified in the system.”

 

MRIS allows commissions to be paid on the net sales price, which it defines as sales price minus seller concessions. What does that mean? The net sales price is the gross sales price less any closing costs normally paid by the buyer, which in this transaction are paid by the seller. Costs to be deducted can include the home warranty, any inspection (home inspection, termite, radon), and all other closing costs paid by the seller.

 

Where should Realtors® look to find whether their commission is based on the gross sales price or the net sales price? This information is included under the “legal” category of the long version of the listing.

 

What can Realtors® do to address this? For most transactions, the difference in the commission paid based on the net sales price and the gross sales price is generally a small portion of the total commission. However, to ensure that payment is based on the gross sales price, Realtors® should make sure to discuss this with their buyer clients and modify the buyer broker agreement to reflect that compensation will be based on the gross sales price of the property. Also, if the commission is paid by the cooperating broker based on the net sales price, then the client will make up the difference.

 

 

Question: In reviewing the MLS comment field, I find a lot of information that should not be there. Can you give us guidance about what information does not belong in the comment section?

 

Answer: The increase in listings of bank-owned properties in the MLS has led to an increase in improper listings. Many bank-owned listings include the name and phone number of the bank that owns the property. Telephone numbers should never be included in the comment section of the MLS. MRIS is currently auditing all listings to identify those that list the bank’s telephone number in the comment section.

 

Another common problem found in listings of bank-owned properties are words to the effect of: “you must use Lender X” or “you must use settlement agent X.” Both of these statements raise the specter of a potential RESPA violation. The legislature in Virginia was clear in its last session that such language constitutes a potential violation of CRESPA (the state equivalent of RESPA). Indeed, new legislation required an amendment to our Virginia Jurisdictional Addendum to include the following language:

 

            “Variation by agreement: The provisions of the Consumer Real Estate Settlement Protection Act may not be varied by agreement, and rights conferred by this chapter may not be waived. The seller may not require the use of a particular settlement agent as a condition of the sales of the property.”