I was on Trulia Voices this morning answering a question/comment from a Home Buyer. The question/comment basically was that Mr. Buyer is unhappy with his current agent, he feels that the agent is forceful with him and always asks Mr. Buyer after each and every showing if he is ready to put in an offer. Now the problem is that Mr. Buyer likes a home that the agent showed him but feels uncomfortable having the agent represent him.
So the question was: "I didn't sign a contract with this agent, can I go find my own agent at another firm and buy the place w/o consequence?"
Four agents including myself responded, the majority said that if the agent showed Mr. Buyer the home the agent is procuring cause and is therefore entitled to a commission. But then I came along and said no, ( I always have to be different) if the agent just showed Mr. Buyer the home the agent is not procuring cause, it is the agent that takes the Buyer through the transaction to the close that is procuring cause.
I remember it as though it were yesterday sitting in an Ethics class with the discussion going back and forth for about an hour and the instructor clearly stating that just showing a home is not procuring clause.
I even checked NAR and it states:
"Common misconceptions about NAR's Code of Ethics can lead to unnecessary disputes with fellow practitioners. Example: procuring cause.
Misunderstanding: Showing a property proves procuring cause and entitles you to a commission if your buyer purchases the home.
The real story: Procuring cause is a complex issue, and no one action ensures that you're entitled to compensation after a sale. Appendix II to Part 10 of the Code of Ethics and Arbitration Manual gives a basic definition of procuring cause as "the uninterrupted series of causal events which results in the successful transaction." Neither showing the property nor having a buyer's representation agreement with the purchaser automatically demonstrates procuring cause."
But why can't we agree? Active Rain I would love to hear your comments.
Maria Mastrolonardo is a full time Illinois Realtor specializing in Short Sales, has been helping home-buyers and home-sellers since 1997. Can help you with any questions or information regarding Short Sales for the Western Suburbs of Chicago which includes but not limited to; Naperville, Aurora, Downers Grove, Lisle, Plainfield, Bolingbrook, Warrenville, Wheaton and Woodridge.
To reach me call/text at (630) 248-6077 or mmastrolonardo@gmail.com
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I agree with you and your NAR statement. For instance, helping the buyer find/understand financing is one of the items considered in procuring cause cases; so would be attending and advising on the home inspection. In other words, showing a home isn't selling a home! Cheers, Harley
Harley - Thanks for your comment, I was starting to feel like I was the only one that thought that way :)
Unfortunately we can't agree because money is involved. If agents properly educated the consumer to the process and provided a high level of service, then we wouldn't have as many issues. States that do not have designated agency or transaction agency have more issues because of the disclosed dual agency issue. I remember, long before buyer agency, working in a sub-division where a buyer came back three weekends in a row to discuss plans, lots, etc. The final time they showed up with an agent (never mentioned or involved). Obviously, this was one for abritration and we won. In our market, agents understand that it is a "clear chain of events" that consumates in a closed transaction that is procuring cause. Fred.
Fred - Thanks for your comment and for stopping by :)
Maria - This will always be up for misinterpretation. It is amazing how many agents differ on this - especially old school agents per se. In Pennsylvania, it comes down to buyer agency, which as you state, comes down to a consumer CHOOSING who they want to represent them. In PA, it is not procuring cause that determines who gets compensated on the buyers side, but who has a buyer agency agreeement with the consumer/client.
Either way, it is frustrating when this happens. Another way to look at it is shame on the agent who showed the property but could not convert the buyer from consumer to client. They should take a step back and learn from that instead of throwing a dart and screaming "procuring cause" ! : )
Is all good ! Great post. ~ Chris
Great post, we were just talking about this the other day and you are right. It is amazing how many agents think the opposite is true.
Chris - Great comment! Thanks for stopping by :)
Patty & Scott - It's amazing how we are not all on the same page. Thanks for your comment!
Maria:
Always a good topic to discuss, and I expect we'll see a lot of hotheads looking for their $$ when the market is this tight. Without an agency contract, the buyer can work with whomever they wish. More reason than ever to tie them up with a buyer agency agreement.
Our founder always said "Procuring cause is: "Offer, Offer ... who's got the offer?" The person who brought the buyer to the point of making an offer to purchase has procuring cause" This too can be argued, but makes the point that without the offer, there is no conclusion to a commission.
Good to "see" you on here; hope all is well, and I still think of the day that we'll meet for a cup of coffee in Naperville!
-Pete
I had a client without benifit of a Buyers Agent Agreement. I showed them 30 houses +, they eventually went to the listing agent of one of the houses we looked at twice. They told me eventually that they thought they could get a better deal.
I felt I had procurring cause (I may have). But the first question I would have been asked was "Do you have a Buyers Contract, if not why?
Then I looked at what the listing agent did wrong. He took a call from a willing and able buyer and wrote the contract. So he did his job.
That left me with nothing and went to another agent. I apperently did not inspire the confidence of the client so they strayed. I felt their reasons were petty, some were valid and I changed some business practices. I learned from it. I would never want to represent a client who had no faith or trust in me, no good can come from that.
I figured the energy I would have spent fighting a procurring cause case on a 90K property would be better spent servicing clients. Had it been a 10M dollar property then my tude may have been different.
Hey Pete! Good to see you here as well. You are right without an offer there is no conclusion.
Chad - Good mindset! We are always learning each and every day. Thanks for stopping by!
Maria - This is a fuzzy issue. In Wisconsin if a buyer calls the lister and views the property, then decides to go to another agent to write an offer, there is a problem. The lister DOES have procuring cause. BUyers here don't always understand that calling an agent or popping in to an open house can cause them to have to "use" an agent that's not of their choosing. OR pay the buyers agent out of their own pocket!
The problem with this issue is that it is so subjective as to who is the procurring cause. Probably why there is more disputes amongst agents than any other issue.
Procuring cause is subjective, not objective, so no - we will never agree! It's the hardest the prove - either way. Personally, I feel if an agent takes the time to show homes, they should be compensated. That said, you've got to treat your clients right so they WANT to work with you! ~A:)
Maria, just a quick thought, maybe Mr. Buyer was looking at quite a few homes and the agent was trying to see what was a good fit for him. It could have appeared that the agent was being pushy. and she probably was No excuses there. It appears that Mr. Buyer was more than willing to keep using this agent for showings. Granted, the agent should have done some self-assessment to see why this buyer wasn't putting in any offers.
With regard to procuring cause, I totally agree with you. Showing homes does not constitute procuring cause. This business, as we all know, is not that easy. It's good to have a convesation like this every once in a while. I think we all get busy with the other aspects of this business, and we forget to dot our "I's" and cross our "T's" Great Discussion.
Another wrinkle is when a home buyer decides that dual agency or something less than 100% loyalty is not for him or her and makes the decision to use an exclusive buyer agent. Should a buyer be denied the right to use an exclusive buyer agent?
Maybe one of you experts can help me out. I have had a Pennsylvania property (inherited) listed with the same agent for close to two years. Within that time, only one contract has been signed from a buyers agent stating a commission of 3% to be split betwenn the buyers and sellers (our) agent. However this deal fell through after the buyer wanted a new roof and windows with a rediculously low offer. Now we (sellers) have found a buyer and agreed to the buyers offer. We delivered the buyer to our (sellers) agent to have them draw up the deal. Now our (sellers) agent wants a commission of 5.74% for the deal. Is this ethical and legal?
Hi Rick,
Since I'm an agent in Illinois and do not know the laws in Pennsylvania I will refer you to experts in Pennsylvania. Chris and Stephanie Somers are top agents in your area and I'm sure that can help you.