Home Buying in 92037>Question Details

Heather, Other/Just Looking in US Air Force, CO

Has anyone ever heard that a buyer's agent will sue the buyer due to commission disputes?

Asked by Heather, US Air Force, CO Fri May 21, 2010

There is no buyer exclusive agreement in place and buyer terminate the agency relationship in writing (email) and tell him he can no longer trust the agent's advice and service. The agent has been pretty unreachable and careless while working with the buyer. But the buyer still want to buy the house which has been showed by this agent once, so the buyer went to seek another agent to work with. The 2nd agent showed the buyer the house again and successfully help him to win the bid. The buyer is very satisfied with the service provided by the 2nd agent. If the buyer get the house, does the 1st agent has any stand to sue the buyer for the commission? or he/she will more likely to go to the board/2nd agent to ask to share the commission? This was happening to my uncle and I wonder if he will gets sued by the 1st agent. I did some research and understand that the 1st agent will clam that he is the "procuring cause". Can the termination letter to the 1st agent being viewed as "interruption"

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Without adjudicating your uncle's case here, Heather, when a buyer switches brokers mid-stream, the buyer runs the risk of owing one of the brokers a commission out of their pocket.

If the first agent can demonstrate that he is "procuring cause," then, it is certainly possible that he will prevail.
3 votes Thank Flag Link Sat May 22, 2010
In the capacity of buyers agent, several years ago I sold a property to a dishonest man. Several months into the contract, an unscrupulous agent, who knew that the buyer was already represented, offered to rebate most of the commission to the bad buyer. Until that moment, the buyer had been totally satisfied with my service. The buyer then attempted to fire me in order to take advantage of the unscrupulous offer.

When I questioned the bad buyer what cause he had to fire me, he could say only that he wanted to sieze most of the commission that I had earned. He could think of no other reason, nor could I.

Heather and her uncle gave plausible reasons for wanting to fire their agent. Still, my experience has me wondering.
2 votes Thank Flag Link Thu Aug 12, 2010
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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As interesting as this topic is, real estate agents/brokers can not give legal advice and we probably do not have all the relevant information to make a decision or give advice if we were legal experts. It is always fun to second guess what could have and should have been done to prevent this situation in the first place.

Good luck with this situation!
2 votes Thank Flag Link Tue Jun 15, 2010
Dear Heather,
Most agency disputes center around "procuring cause". The issue here is that the first agent brought you to see the house that you made the offer on, and so will likely be considered the agent who is paid.
There's not much that can be done on your end now, as the brokerages will dispute this from here on. Hopefully they will come to an agreement that satisfies both professionals.
2 votes Thank Flag Link Sat May 22, 2010
Hi Heather,
Your uncle had every right to choose another broker and without a Exclusive Buyer Broker Agreement in place the 1st agent has no claim. In my opinion the procuring cause is fulfilled when the contract is written and accepted, and that was accomplished by the 2nd agent. Before the 1st agent sued anyone I think the Brokers would figure it out and if not, would go to the Board of Realtors for arbitration if they couldn't agree.
Best of luck,
Patricia
2 votes Thank Flag Link Sat May 22, 2010
The hearing panel at the board will decide if the letter constitutes interruption or estrangement. Without a buyer's agency contract, I have never heard of an agent pursuing a commission from a buyer. At least in Michigan, the buyer's agent's commission is usually paid by the seller through the seller's agent.

The first agent could take it to the board to try to get the commission from the second agent, but I think it is unlikely that they would have much standing against a purchaser.

Unfortunately, people can and do sue for lots of unwarranted reasons. I can't imagine the agent suing your uncle, but you never know.
2 votes Thank Flag Link Sat May 22, 2010
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
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I had a Buyer's agency agreement in NC with a buyer, after showing him over 22 Homes, I sat down with him and made him realize he needed to make a decision as I had done my homework and had honestly found him 2 homes he was extremely interested but couldn't make up his mind.
Once of the homes had been reduced $15K by seller and only been in market for 10days, I told buyer of the actual new sales price although it was still showing higher, he than said he wanted to offer $12K less from new price plus $3500 in Closing cost. I explained to buyer that if he wanted to go this route he was risking the fact that another buyer could come and snatch house while we made low offer and most likely got a counter back, he insisted, I wrote the offer and sent it to him to never hear back from him again after leaving a Voice message, text & emails.
Then I found out that house is under contract with this buyer as he contacted not 1 but 2 other Realtors to show him house and made offer! Because I had already contacted Listing agent with this buyer's name she was able to let me know he was under contract.
I have filed in Small claims court a law suit against him and as soon as house closes will file with the Board of Realtor a claim against the agent that helped him as this buyer had agency agreement that doesn't terminate for another 4 months! People need to learn to be honest in this world
1 vote Thank Flag Link Sun Sep 8, 2013
I concur with Maureen questioning Denise on where did she get the information that the second Realtor offered 2% of his commission to "sway away" the Buyer from the first agent. Also, I don't think that Heather ever mentioned that the second agent was the listing agent, so, where did Denise get all these data? I would love to find out. On the other hand, Heather gave us unclear information. The fact that the first agent not only showed the home to the Buyer but presented an offer to the Seller, with the wrong price, and then,Heather did not respond to my question asking her if the offer had been signed by the Buyer, if the offer had been presented to the Seller's agent and if the Seller had responded to the offer. "Procuring Cause" in California and I can not say it is the same in every other State, has in my eyes a bottom line, after many factors have been taken into consideration. Did the first agent try to convince the Buyer to write an offer to buy the home, did he try to convince the Buyer that the home was a good investment, the right neighborhood, the perfect home for him. Did he try to offer help in recommending financing. Also, the length of time that went by between the showings by the first and the second agent. If the first agent did all this, then he might be entitled to a commission after taking the second agent to the Board of Realtors for Arbitration. Unless there are different laws in Colorado, I sincerely doubt that the first agent can sue the Buyer, especially since he did not have a Buyer's Broker Agreement signed by the Buyer. On the other hand, the threatening letters that the first agent sent to the Buyer, are in my eyes, unethical and I am sure sent without the approval of his Broker. If an offer was presented to the Seller's agent by the first agent, then, in spite of his unethical behavior, the Board of Realtors might rule in his favor.
1 vote Thank Flag Link Sat Mar 19, 2011
Denise,

My point was that Heather, the person who posed the question, never stated anything about a commission reduction/rebate. The agents that have answered have shared their own experiences and one mentioned something about a commission rebate when something similar happened to him. These threads on Trulia are not chronological and we have to look at who said what and when before we answer in order to get a complete picture of what happened.

I certainly don't want to work for free. We all work hard. I use buyer's agency contracts and listing agreements so that everyone I chose to work with is clear up front on how I expect to be paid. Works for me and I don't have issues down the line.
1 vote Thank Flag Link Sat Mar 19, 2011
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
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Denise,

I am not clear where you got the information that the second agent offered his commission to "sway the buyer." I must have missed that in the information that Heather supplied when she asked this question nearly a year ago. I don't see here that Heather has made any comments about this since May 2010.

Maureen
1 vote Thank Flag Link Fri Mar 18, 2011
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
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We cannot give legal advice, however, it will be hard for the agent to win if he was negligent in response and didn't follow the term - "time is of the essence".

Patrick A. Hale, CDPE, RSD
Real Estate Broker & Investor

REO & SHORT SALE EXPERTS WITH A MISSION TO:
"Help Over 360 Distressed Home Owners Avoid Foreclosure"
If You or Someone You Know is in Financial Distress Visit: http://www.SDRealEstate360.com
Web Reference: http://www.reofsd.com
1 vote Thank Flag Link Thu Aug 12, 2010
An agreement between buyer and buyer's agent was ineffect, buyer without consent of his agent made a direct offer to seller's agent, upon close of escrow buyer owed his agent a commision, since he was under a contract , with his agent, his agent did not have to find or show the property, all he needed was an exclusive agency "to buy" contract. The buyer would have to prove that his agent was incompetant,or negligent. Paper trail is always best, whe there is a dispute, buyer should have informed second agent , that he was under contract to his agent..
1 vote Thank Flag Link Wed Jun 30, 2010
Heather

I am sorry. I missed the explanation that you gave afterwards regarding an offer written by the first agent on behalf of your uncle. Was that offer presented to the Seller? You also said that the first agent made a mistake in the offered price. Did you uncle signed the offer? Was there a response from the Seller on the offer? All these could make a difference in the "procuring cause" situation but again, it is my opinion that the first agent might have a case against the second agent if an offer was presented to the Seller but without a Buyer's Broker Agreement I don't believe he has a case against your uncle. This is only an opinion. I am not a Real Estate Attorney.
1 vote Thank Flag Link Wed Jun 16, 2010
In Florida, the Florida Real Estate Commission would make the decision about "procuring cause". However, if you discuss your concens with the Broker of the second agent, and perhaps the local Board of Realtors, they will probably be able to guide you before any further action is necessary. It sounds as if you are on the right track, doing your homework.
Good luck!
1 vote Thank Flag Link Tue Jun 15, 2010
Hi Heather:

Since there is no exclusive written agreement in place, you Uncle should be just fine.

Good luck.
Perry
Web Reference: http://www.ruthandperry.com
1 vote Thank Flag Link Tue Jun 15, 2010
Heather; In a "procuring cause" situation, one of the most important actions that the first agent that showed the home to your uncle needed to have done, was to push hard to sell the home, to offer help or advice in procuring financing for that particular home, to have pondered the advantages of this home over other homes that he had shown to your uncle previously and really to have tried to write a purchase contract on that home on behalf of your uncle. If all these conditions took place when he showed the home, maybe, and then again maybe, he could take the other agent and his Broker to his Board of Realtors for Arbitration or Mediation to try to get the Board to re-assign the commission paid to the second agent back to him (her) because he was the "procuring cause". I do not believe that your uncle could be sued because he switched agents. Buyers have the right to work with whomever they select, providing they did not sign a Buyers' Broker Agreement with the agent in the first place. So, I don't believe your uncle has to fear a law suit, but on the other hand, maybe he could have selected another home to buy, especially if the first agent spent considerable amount of time showing homes to him. This is only a personal opinion. I am not a Real Estate attorney but I do know about "procuring cause" situations.
1 vote Thank Flag Link Tue Jun 15, 2010
1) Interruption makes procuring cause a more difficult case to prove. 2) I think your uncle will be okay in this situation, particularly with the buyer letter to their former agent! 3) From a professional standpoint: If I were the first agent, I would reexamine my commitment level to customer service and not feel slighted, because professionally, I did not do a good job here and have only myself to blame.
1 vote Thank Flag Link Wed Jun 2, 2010
Since there is no contract in place for the first agent, he or she has no grounds to sue the buyer for commissions, since the contract determines how much should the agent get from any transaction with a potential buyer. If the first agent does complain to the board, better arm yourself with information about state, where the transaction took place, about home buying transaction procedures and information from the agency that hired the agent about their commission basis. If i understand your letter, its as if the first agent bungled
the transaction and can be deemed incompetent, something you should press a complaint to his or her employer.
1 vote Thank Flag Link Mon May 31, 2010
Heather, what do you want us to say?

Real estate law is pretty specific as to what the duties of a licensee (broker / agent) are, and under what conditions they are to be paid. None of which has very much to do with "being happy with the agent's service," or having emails sent of the type you quoted.

"Procuring cause" is looked at differently from state to state, but I think that, unless your uncle can demonstrate that the first agent behaved in an illegal or unethical way, he is going to have to resolve this "procuring cause" issue in a way that doesn't obligate him to pay a commission to one of these agents.

All the best,
1 vote Thank Flag Link Sat May 22, 2010
Thanks everyone for the input. The 2nd agent knows about everything and he is willing to take this business given that my uncle didn't sign a buyer's exclusive agreement with the 1st agent plus my uncle have sent the 1st agent notice that he would like to end the agency relationship and work with other agent. The 1st agent has sent my uncle two emails with very strong tone like

" If you buy any condo that we showed you, we are entitled to a commission.
We have a right to pursue you, your new agent or the listing agent of any property we showed you for
a commission on any property that was shown to you or introduced to you by us. I wish you good luck and all the best. but we cannot let people cheat us out of commissions."

"I understand you are not happy with my service, but I would like for you to reconsider that. There is no honest, legal or ethical way to cut me out of any properties that I have shown you. If you are 100 percent sure to dump me for another agent. Please let me know so I can know how to proceed."

I don't know...is it right for an agent to talk to customer like that? I know he is upset because he may lose the commission but he lost the commission because my uncle can't trust his service and advise!

First, he didn't explain/give "customer information statement" to my uncle (we know that's important from his 2nd agent) Second, after my uncle tell him he is going to make the first offer and have signed all the documents, he has to call/email the 1st agent several time to confirm if his offer has been submitted. Third, the 1st agent actually made a mistake in the offered price submitting to the seller, my uncle asked him why did that happen, and the 1st agent didn't reply him until my uncle send him notice and tell him that he decided to move on with another agent. Forth, until asking other agents, my uncle realize actually there are many things about the property that the 1st agent didn't tell him. Apparently the 1st agent wasn't very familiar with the property.

I don't know..this is USA. Anyone can sue anyone if he has time and money. But if my uncle was really unhappy with the 1st agent's service and after receiving those very unfriendly email sent by the 1st agent, there is no way he can work with him anymore.......and the 1st agent still claims he has the title of the commission? that really doesn't make sense to me....
1 vote Thank Flag Link Sat May 22, 2010
Hi Heather, "procuring cause" would be the rationale for the first buyer's agent to make a claim on the commission since she showed you the home. In my opinion --- in terms of the target of her claim, it will be directed against the second agent not the buyer - follow the payment stream. Recommend that you gather your supporting info on written communications and notes in your daytimer as well to support the requests and rationale to/for terminating the one relationship. It likely will be very helpful to the second agent who may be challenged by the first.

Tricky business, and always unfortunate when it gets in the way of a happy ending.

Best,
Jeanne Feenick
Web Reference: http://www.feenick.com
1 vote Thank Flag Link Sat May 22, 2010
the termination could be viewed as an interruption in the chain of events that lead to procuring cause... depending on how much time has passed between the two viewings.

It's unlikely that the agent will sue your uncle, but they may approach the 2nd agent's agency, asking for a portion of the commission. Does the 2nd agent know the full details of how this worked... if not, he should be filled in so that he and his broker can respond accordingly. He may have to give up a portion of his commission, but that shouldn't really involve your uncle.

Good luck.
1 vote Thank Flag Link Sat May 22, 2010
Alan May, Real Estate Pro in 60201
MVP'08
Contact
The gray area is if he didnt sign anything then shame on the Realtor as agency disclosure at worst should have been signed along with a transaction broker form or what ever the law outlines or calls it in your area.

Where the first agent was procurring cause they may have some claim of the commission but dont think they can sue teh buyer as they had no agreement. the best thing to do is at least use teh first free meeting with an attormey to get some direction.
Web Reference: http://www.ScottSellsNH.com
1 vote Thank Flag Link Sat May 22, 2010
Sorry to hijack this thread but we have a similar situation --

We saw a house in Open House and asked our Buyer Agent (no contract only representation) to write an offer. Offer was not accepted. We made offer for another house (again we saw in OH). This was a Owner Sale and Owner offered 1% commission. Our Agent insisted for 2% and the deal fell off ( we learnt about all these from the Owner after the deal fell off).

This made us upset. I think she should have told us that seller is offering 1% and she would not work for that. We told her we will not be buying anything.


Few days later, we went back to the first house directly through the Sellers Agent, negotiated further and offer is accepted. The Selling Agent has now added the following in the P&S -- "Buyer represents and warrants there are no other broker with whom Buyer has dealt in connection with purchase of the premises ". I am suspecting this will be a lie and our earlier Agent might come after us for commission . Please advise

Remember, our agent did not show us any of the property , just wrote offer.
0 votes Thank Flag Link Mon Sep 8, 2014
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