Saturday, November 18, 2017
       
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PROCURING CAUSE  by Ronn Huth
  

As an active Realtor since the late l980's and a member of Professional Standards I have been on Procuring Cause Hearing Panels and have also had the responsibility to chair the hearings for the Realtor Association.  While the primary participants are Realtors, it is also possible that you as a consumer may be asked to participate and the results certainly would concern both you and your buyer's agent.


It’s a little known fact among consumers, but many times when you contact a real estate agent they assume you are “their buyer” because you contacted them.  This sets up an expectation that they will receive a commission from the transaction when you close on a property whether or not it is their listing.  In fact, if it's their listing, they may be looking for a double commission.


That can get very sticky when a buyer purchases a property through their Buyer’s Agent and another Realtor believes you are “their buyer” and therefore they deserve the commission offered in the MLS.  They can then file a complaint against your Buyer’s Agent claiming they are the Procuring Cause because you are “their buyer”.


Procuring Cause is the sequence of events that leads to a sale.  That is how a hearing panel determines the real estate agent or broker who, by their actions in producing a buyer, brought about the sale of a property.  It can be a rather long process and even though your Buyer’s Agent may very well win, though not always, it means the agent will have no compensation for months and months.  


Many times before a buyer engages a buyer's agent they make contact with a number of real estate agents during the early stages of their home search.  Many times these agents will call back or email you after you have already decided upon and officially engaged a buyer's agent.  So rather than run the risk of making a transaction sticky and complicated, I recommend you simply notify them that you are now working with a Buyer’s Agent and all future communication should go through him or her.


It’s unfortunate that real estate can seem so consumer “unfriendly” in situations like this, so I like to make sure my friends and clients are aware of the issues involved in Procuring Cause.  The more communication that goes on between the buyer and any real estate agent, the stronger their case at a Procuring Cause arbitration.  The sad thing is that most consumers have no idea of this underlying friction within our industry.


I read an article by Elizabeth Weinberg regarding this issue and her recommendations to home buyers to avoid this trap.  Here is what she says.

Tips to help you avoid Procuring Cause by Elizabeth Weinberg

  • Say you are working with another agent.
    If agents don't ask you if you're working with another agent, then promptly volunteer that information. Agents are supposed to ask you this question but sometimes they don't: they forget, are afraid to hear the answer, become distracted. Set them straight immediately.
  •  Sign an agency disclosure with your agent.
    Agency disclosures describe the various capacities under which an agent can operate. Since the agent doesn't know the specific capacity until a property is located, all capacities are described to you.
  • Sign a buyer's broker agreement with your agent.
    Buyer's broker agreements will clearly describe the relationships, compensation and duties. 
     
  • Do not ask another agent to show you property.
    Your agent is eager to help you. Part of your agent's duties is to show you homes for sale, even if those are homes that you have located yourself. Let your agent earn her commission. 
  • Do not directly call listing agents for information.
    Your agent will probably get more detailed information from the listing agent than you will get, anyway. There will be no confusion if your agent calls the listing agent. 
  • Follow Open House protocol if you go unescorted.
    If you attend Open Houses without your agent, hand your agent's business card to the agent hosting the Open. Sign guest books with your agent's name next to your own. Not only will this help protect you, the open house agent won't try to corral you or request personal information.