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Jonathan Bow…, Real Estate Pro in Stoughton, MA

Real estate agents, what is your definition of procuring cause?

Asked by Jonathan Bowen, Stoughton, MA Wed Oct 17, 2007

I argue that an agent needs to accompany a buyer to an open house or showing in order to be eligible for representation and compensation. If the agent can't accompany, then a courtesy phone call explaining their situation should be required. What do you think? Thanks, Jon

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Hi Jonathan,

I know you already know where I stand on this issue from my posts on other threads. I am answering on this thread for those who may not visit the former posts.

A Realtor hosting an open house is there as the sellers agent, and has a fiduciary responsibility to the seller. It is unrealistic to expect all buyers everywhere to be told that they cannot attend a public open house without their agent or without scheduling it the visit with their agent. Such defies the purpose of the ease of showing and attracting potential buyers to the sellers property.

If for some reason, a buyer attends an open house, states they have a Realtor, then continues to work with the Realtor who hosted the open house, a procuring cause might be established with that OH host. If a buyer attends an OH, and proceeds with all future dialogue w/ their Buyer Agent, the OH Host is not a procuring cause. In that instance, the OH Host fulfilled his/her duties to the seller in promoting and marketing the property. The mere visit to the OH does not meet the requirements of procuring cause.

Procuring cause is not limited to a single action, but a succession of actions that in totality are responsible for the buyer making a decision to purchase the property. What follows is a quote from my post on Trulia in August, 2007.

PROCURING CAUSE: Procuring cause is the interplay of factors which demonstrate the unbroken efforts of a broker (through their agent) that are responsible for the buyer making a decision to consummate the sale. I have seen other posts on the subject of ““procuring cause”” and found erroneous info. I have seen assertions that the person who wrote the contract is the procuring cause, and I have seen assertions that the person who first showed the property is the procuring cause. Neither stand on their own as a determinant. Procuring cause guidelines span pages of questions to explore in determining the continuity of the actions of the parties.

Deborah
3 votes Thank Flag Link Wed Oct 17, 2007
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
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Very well stated Deborah.

Here is an article and link from the NAR website that might help. http://www.realtor.org/rmotoolkits.nsf/pages/close28?OpenDoc…

7 Key Questions To Determine Procuring Cause

The majority of commission disputes hinge on disagreements over whether individuals contributed significantly to making a sale. In determining if a cooperating salesperson or broker is entitled to a commission, consider the following:

1. When and how was the original introduction [of the buyer to the property] made?

2. Did the original introduction start an uninterrupted series of events leading to the sale?

3. Did the broker/salesperson who made the original introduction maintain contact with the buyers?

4. Did the broker/salesperson engage in conduct that prompted the buyer to look elsewhere for assistance?

5. If more than one cooperating broker was involved, was the second broker/salesperson aware of the prior introduction of the buyer to the property?

6. Was the introduction of a second broker an intrusion into the transaction or the result of estrangement or abandonment by the original broker?

7. Did the cooperating broker initiate a separate series of events, not dependent on the original broker’s/salesperson’s efforts, that led to the successful transaction?

Adapted from Florida REALTOR® , January 1994
1 vote Thank Flag Link Thu Oct 18, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
MVP'08
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The easiest way to avoid disputes is to have an Exclusive Buyer Agency Agreement. Got burnt once with my buyer going to an open house and buying the home from the listing agent. Shame on me but one time only!
1 vote Thank Flag Link Wed Oct 17, 2007
I dont think much of or worry about procuring cause. More and more, agents are losing procuring cause arbitrations, because ultimately, the prospect went elsewhere, the chain was broken. I believe as a member of MLS, you cannot restrict and demand that an agent accompany. You have made a blanket offer in the MLS to compensate members of your association. If I give my client a list to drive around and look at, and your home happens to be on the list and you happen to be holdong it open, and my clients come back to me and say they loved it, they want it, they are my client, not yours, you just happened to have the door open. Can my seller represent the buyer just because he was outside watering the lawn when they drove by and saw the sign and he said "come on in!" NO, and same goes for your scenario. P
1 vote Thank Flag Link Wed Oct 17, 2007
Although your ethics are good one has to look at the practical end of our business and the types of buyers we sometime encounter which I have. They make you do all this work you provide the information of all your research and work and then they go with someone else because of whatever reason (sometimes Im not as pretty as some of my co-horts) using the information you provided. To me if I do the work and provide the information and I properly notify say the listing office that I did the work in case they call them then Im the procuring cause. If I don't notify the listing office of the work I've done and the person's name how can I prove that I did the work and became the procuring cause for that particular buyer? We are in the business of communications or as I tell my agents, "We sell disclosures"
1 vote Thank Flag Link Wed Oct 17, 2007
Procuring cause is the uninterrupted series of events caused by the broker resulting in the ultimate purchase of a property. The broker need not effect the ultimate closing because a Seller could simply side-step the broker by getting the Buyer to sign a purchase and sale agreement, cancelling the commission provisions of the PSA and closing without paying a commission. Unfair, unethical and is hapening all too often these days.

Marty Rood
Mr. 99 & Associates, Inc.
0 votes Thank Flag Link Wed May 27, 2015
Jonathan,

Go to http://www.realtor.org and do a search for "Code of Ethics and Arbitration Manual". There is a wealth of information about the topic there and is the document given to the professional standard committee members when reviewing a commission dispute.

I agree with your sentiment but NAR has been getting away from requiring specific steps in consideration of compensation because of the troubles they have been having with the DOJ. Procuring cause has moved away from the threashold requirement as it used to be and is moving toward allowing the arbitration panels to weigh the facts and make a decision.

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Wed Oct 1, 2008
The answer given by Luetta is the explanation that was used in my recent continuing education exam. The subject is very vaque and proving to be the PC is a challenge.

I've been on both sides of the PC issue and the one that gets the check- is usually the one that did the procuring. SHOWING something is far different than SELLING something.
0 votes Thank Flag Link Mon Sep 15, 2008
In simple terms, "It is the one who shakes the tree not the one who gathers the apples".
0 votes Thank Flag Link Mon Sep 15, 2008
An agent does not have to accompany their buyer to an Open House. The buyer should say they are already represented by a realtor. The buyer's agent should educate their buyers when going to Open Houses or new construction to say immediately they are represented (under contract) and present their agent's card.

Definition of procuring cause of a sale... the broker must have started or caused a chain of events that resulted in the sale. A broker who causes or completes such an action without a contract or without having been promised payment is a volunteer and may not legally claim compensation.
0 votes Thank Flag Link Thu Oct 18, 2007
Hi Richard, my office chooses not to be associated with NAR, so I can't call my local board to discuss this.
Web Reference: http://www.bowenboston.com
0 votes Thank Flag Link Thu Oct 18, 2007
Jonathan, I suggest you contact your Local Association of Realtors and ask them to send you a form detailing what defines a procuring cause. Good luck.
0 votes Thank Flag Link Thu Oct 18, 2007
This a continuation of on earlier thread:

http://www.trulia.com/voices/Home_Selling/Real_estate_agents…

Jonathan, a courtesy phone call, should be just that... a courtesy call - not a requirement.

If someone cares about their reputation they will act courteously.

I believe compensation is earned and should be paid to the cooperating buyers agent who informs a buyer of a listing existence, brings a buyer, and properly handles the transaction from offer to negotiation through escrow to close and handing off keys. If the cooperating agent does not perform all of those actions, but does contribute significantly to a successful transaction, then compensation still should be paid, even if not "earned" in its entirety.
0 votes Thank Flag Link Wed Oct 17, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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