Home Buying in Wheaton>Question Details

Trina B., Home Buyer in Wheaton, IL

Implied Agency? Do we have a buyer's agent now?

Asked by Trina B., Wheaton, IL Thu Nov 8, 2007

I saw a house on the internet and called the broker who listed it to set up an appointment to see it. He sent one of his associates to show it to us. At that time we had not engaged a buyer's agent yet. After showing the house, the agent said that she would be the one to write up the offer. We told her we would think about it. We want to use a different agent to write the offer. Are we now obligated to use the agent who showed us the house?

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Jay, there are so many holes in your "procuring cause" scare tactics flyer that it's not even worth commenting. I think the secret agent in the long trench coat really says it all.

Procuring Cause does NOT manifest itself unwarranted, and is not the only thing that is considered, when determining compensation to buyer's agents. Listing agents show properties to unaffiliated buyers all the time, expecting zero compensation, or occasionally only a "showing fee", simply in order to get their seller's home sold.

A buyer who may have seen the house originally in January without an agent, who shows up in March now WITH a buyer's agent (having had no, or little contact with the listing agent in the meanwhile), will likely not have a problem due to procuring cause. The smart listing agent will see that the buyer's agent is duly compensated, since that's in the seller's best interests.
4 votes Thank Flag Link Thu May 29, 2008
Alan May, Real Estate Pro in 60201
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Trina,

You bring up a sticky subject, and I'm afraid that, with some answers coming from outside Illnois, I'm afraid it's gotten even more confusing. Illinois does operate under "implied agency"...when the agent works "for" whomever they work "with" unless disclosed otherwise in writing. I think in efforts to make things "easier" for agents and public alike, the waters are simply just as muddy as they always were. And part of the problem is, though most practicing agents understand the "rules" of conduct and their implications, the public certainly does not. The public OFTEN thinks "well, I'm not even sure if that's a house I want so I'll just call the listing office to let me in to take a look"...and VOILA...they've gotten enmeshed in our procuring cause web.

The reality is you can write a contract with whatever agent you choose...you're not "obligated" to write it with the agent who showed you the home. And here in Illinois, if the AGENT who showed you the home is not the LISTING AGENT, they are NOT acting as a dual agent (disclosed or otherwise). Illinois is a "designated agency" state. The Brokerage (ie Broker) "represents" the seller, and the listing agent is "designated" by the broker to service the seller. So if that agent who showed you the home was not the lister, they were not practicing dual agency and had no requirement to make any "dual agency disclosures" to you.

However, even though you are not required to write an offer with the agent who showed you the property, you really, in all fairness, should advise your own agent that you saw the home with someone else. Now there are rules of conduct for a successful claim of procuring cause. One of those rules of conduct is maintaining vigilent communication with the client so as not to break the string of events leading from showing to offer. In other words, if the agent who showed you the home is not following up with you, offering "client level" services, you might well be experiencing "abandonment" by that agent. Just showing the house is not an automatic Pass for getting paid a commission.

Even if the showing agent has been vigilent, you might discuss another alternative with your agent. They may be willing to contact the showing agent (particularly if that agent HAS been vigilent, providing you with quality services and guidance) and offer to pay that agent a "referral fee" so that your own agent can proceed with servicing your needs. Some agents will balk at that since there truly was NO referral involved, but others may feel it a worthwhile strategy. There is definitely risk involved because the agent who showed the property (who works for the listing broker) will likely challenge your own agent's right to the commission, and the listing broker would likely withhold the commission at closing and the situation would be presented to their local Board of Realtors, Professional Standards committee for decision. In such a case, the committees do place some weight on who tried to come to a resolution BEFORE the case was presented to the board. They appreciate when the parties try to work the issue out.

We have NO "threshold" rule here (where the fee ALWAYS goes to procuring cause or ALWAYS goes to whoever wrote the offer). These decisions are very much on a case by case basis.

It's unfortunate that we, as an industry, are not a lot more vocal about the pitfalls involved in situations such as yours....particularly since such things happen so often!

Best of luck
4 votes Thank Flag Link Sun Nov 11, 2007
As another Illinois Realtor, I support the core issue/response that Bill gave. The issue here is procuring cause and the agent that showed you the home is due some compensation regardless of who writes the offer for you. Granted, that compensation will not come out of your pocket, but it makes the situation sticky for the agent that you ask to represent you and write your offer. If you choose another Realtor, tell them someone else has already shown you the house and let them work out compensation with the listing agent and the listing agent's associate.
4 votes Thank Flag Link Thu Nov 8, 2007
Clark, that is correct in Illinois, but there are other states in the union where using two agents from the same office does constitute "dual agency".

And while we may disagree with one another, I'd like to call for a moratorium on calling each other names (like "idiot"). We can respectfully disagree with one another.
3 votes Thank Flag Link Mon Jun 2, 2008
Alan May, Real Estate Pro in 60201
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We say it all the time ... real estate IS local. I find comments like "it is used-all the time-to steal away a buyer's right to representation" both irresponsible and reprehensible. There may be SOME agents who pull tactics like that, and frankly that behavior is also reprehensible! And I'd certainly argue it is by far the EXCEPTION...not the rule!

Buyers have every right (in most states anyway) to their own representation. Having sat on Professional Standards for my local Board of Realtors for many years, "procuring cause" does not guarantee anything. Neither does, however, an "exclusive buyer contract" ... which is an agreement that the buyer signs with an agent they wish to represent them. There are times when agents have just had buyers sign these agreements and then sent them off on their merry way to find a house...and when the buyer did, they expected to get paid...AFTER PERFORMING NO SERVICE TO THE BUYER AT ALL!!! (Also reprehensible by the way!)

The "professionals" in this industry SERVE THE NEEDS OF THEIR CLIENTS and they DESERVE COMPENSATION FOR THAT SERVICE. But until we, as an industry, stop handing out licenses to everyone and anyone who can fog a mirror, unethical, inappropriate actions will continue to plague our industry ... serving no one.

JudiB
3 votes Thank Flag Link Thu May 29, 2008
Trina,

Why are Realtors’ always asking “Are you working with another agent”? This answer is Procuring Cause.

You question is difficult to answer definitively, not having witnessed the interactions with the showing agent.

You initiated contact with the listing office. At some point the showing agent should have asked “if you were working with another agent or you should have offer the information. The agent writing the offer should have inquired about your knowledge of the house.

If the showing agent is unaware of another agent being involved then there exist an issue of Procuring Cause. Which would be filed by the showing agent at the local Realtor Board for resolution. The agent that is writing the offer could have resolved the issue by calling the showing agent and alerting him that he was writing an offer for the house and offered him a Showing Fee (that’s providing the writing agent was aware of the showing agent).

If the issue goes before the Local Realtor board the may very try to get the agent writing the offer on the house, to pay the showing agent a Showing Fee, and get the showing agent to accept the Showing Fee in full and final resolution.

Bottom line there is no actions that can be taken towards you. Additionally, your are totally free to choose whoever you want to work with. This is an issue between the two Realtor and possibly the Local Board of Realtors.
Web Reference: http://www.justcallwahl.com
3 votes Thank Flag Link Thu Nov 8, 2007
read the new york agency disclosure form and the definition of a designated dual agent. By the way, I never said the state real estate board makes laws, I said it then goes through the legislative process. You may not agree with the document.......but it is the basis of the way in which we do business and unless and until it is changed, designated agents are here to stay.
2 votes Thank Flag Link Thu Sep 17, 2009
Again, you are totally unaware of the New York real estate market. Probably no less than 99% of all brokers represent sellers. about 10 to 15% will also represent buyers. I don't think that even 1% of the brokers represent only buyers. Some offices have agents who will only handle buyers and others who will only handle sellers. Almost none handle only buyers. It is very easy to read an article and go EUREKA, they don't know what they are doing. In fact, most brokers have it well under control and since we handle some of the highest priced real estate, we are no doubt dealing with a very well educated and savvy public. Come to New York and work here for a year or two and then preach your gospel. Let's see if you can put together a transaction here with all the local zoning laws and building codes that are part of our everyday life. Until you understand our market, as long as we are doing what the state allows, stop damning us.
2 votes Thank Flag Link Thu Sep 17, 2009
I read that old post. Just because an agent wrote it doesn't necessarily make it so. Agency disclosure form has been the law since 1992. My vast experience has shown that many agents are just too lazy to take the time and explain the form and all it means to the public. Not all that long ago New York City agents had no idea that buyer agency even existed. I taught many classes in NYC and was appallled at the lack of knowledge some of these agents taking broker courses and ce exhibited.
The point of agency disclosure form is to give the public a choice. Do I want to hire someone to repesent me or am I content with an agent who, by New York law, must deal honestly and fairly with me even if he doesn't represent me. The payment of commission does not come into play with the agency disclosure. That is part and parcel of the contractual agreement. I have been writing courses, teaching them and lecturing on real estate related subjects for many years and find that often in our field and I am sure in others as well laziness is often the reason for failure. Not being too lazy to follow the law and discuss agency will go a long way toward working honestly and fairly with the public.
2 votes Thank Flag Link Thu Sep 17, 2009
Thanks John...I know sometimes that happens as people dig up these old questions for all different kinds of reasons and agendas. I know I've posted before realizing a question was posted in 1896 and was a little upset that someone had dug it up...You help people with current questions and issues as does Lori so just thought you'd like to know

And to be fair you know I jumped on a person from PA. with an opposing view of Dual Agency just the other day for digging up a two year old question just to post anti-dual agency comments.....BTW she made the exact same comment as Jay in response to me....Didn't buy it from her and don't buy it here.

Many current places to post any info/opinions or start a new thread....Using old questions is lame IMO..

Thanks again John
2 votes Thank Flag Link Thu Sep 10, 2009
You know what Dunes... I saw the date as I hit send.

I hope Trina has it sorted out by now!

Maybe Trulia should lock questions after a period of time. That may be the best way to go about it and avoid this situation.
2 votes Thank Flag Link Thu Sep 10, 2009
Jay, First of all, I have never had a buyer who saw a home with me present an offer with another agent. I have also never had a buyer answer "yes", to "are you working with another agent". Every open I have done, the agent has either COME with the buyer, or called ahead of time, which is common courtesy. I don't know if the buyers were -- heaven forbid! -- lying, or telling the truth, but I've never had one say they had another agent. I would make a case for prucuring cause, however, if they had presented the offer from an agent who had never been in the house or brought them.

Secondly, Jay and Benjamin, I have never acted as a dual agent in any of the cases where I have had both sides. There is no automatic dual agency in NY. My client, the seller, would never agree to dual agency anyway. They've hired me to act in their best interest, not to be a disinterested third party. The buyers have always understood my fiduciary responsibility to them. I stress when they first sign the disclosure that I have a fiduciary responsibility to treat them FAIRLY, which has extended to pointing out that some buyers ask for an appraisal contingency. Is that not fair? Is that working against a seller's best interest? Not in my opinion. I've already warned all my clients that if their house doesn't appraise we're going to get our hopes raised for nothing, and I don't take overpriced listings.

Third: All the talk about an exclusive buyer agent contracts. New York buyers will kick and scream and hell will freeze before they will sign ANYTHING obligating them to do anything that they've always gotten for free in the past. Are there a few buyers from NYC who understand what buyer agency is? Certainly. Do even THEY want to enter a contract? Usually not.
2 votes Thank Flag Link Tue Jun 3, 2008
And I still contend, and here's where we differ, that Trina is not locked-in to the agent she saw the property with, simply because s/he was the first agent to show it. Procuring cause it much more involved than that.

Every agent on this thread has said something to that effect, but for some reason, you continue to choose to ignore that, and press your "Secret Contract" which oddly enough fits your own agenda.

I leave it to the reading public to decide who's argument is self-serving.
2 votes Thank Flag Link Fri May 30, 2008
Alan May, Real Estate Pro in 60201
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I guess that posting behind a fake name makes about as much sense as your take on procuring cause, though. Your understanding of the concept is beneath rudimentary.
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You are a charmer, I'll give you that.

My understanding of procuring cause is fully fleshed out and has been tested, here in Illinois, which is where Trina is from. It works exactly as I described and I can manage to say that without the need to denigrate you.
2 votes Thank Flag Link Fri May 30, 2008
Alan May, Real Estate Pro in 60201
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I surely understand why you post under a fake name, Elvis.
~~~~~~~~~~~~~~
all of my contact information is on my profile. But nice attempt to deflect.
2 votes Thank Flag Link Fri May 30, 2008
Alan May, Real Estate Pro in 60201
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Buyer looks for property online. Buyer contacts listing agent, or other non buyer agent. Agent meets buyer at property. Agent does not offer meaningful disclosure about different agency relationships. Agent does not disclose that, thanks to procuring cause, buyer is giving up the right to choose a buyer's agent later on.
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Some agents do not explain agency thoroughly, I'll give you that, but procuring cause is not to my knowledge something that is required to be explained. I do ask if the person is working with another agent, they then have the opportunity to tell me yes (and they can bring them in if they want), then I usually ask them where the agent is if it's an open house. I suppose in your perfect real estate world, agents are the only people who need to disclose?
2 votes Thank Flag Link Fri May 30, 2008
I'm not positive but I think the person that showed you the home is the procuring cause. They may have a claim for a commission should you bring in another agent.
Web Reference: http://getprequalified.com
2 votes Thank Flag Link Thu May 29, 2008
LOL Elvis, the flyer sure sounds to me like HE wants to ensure that HE gets paid. Like most buyers I come across, I would have to show any "agreement" to my attorney before I would sign it.
2 votes Thank Flag Link Thu May 29, 2008
EKerry...

the courts in Illinois may require the buyer's agency to be in writing "in order to be enforceable". But you are not required to be in writing, in order to be compensated... that only becomes an issue if there is some contention. As Judi mentioned, Illinois is an "implied agency" state, that presumes you are working FOR the person that you are working WITH!

Judi's answer was complete and thorough and correct. (what a nice combination). The client has the right to work with whomever they please. And unless the "showing" agent had the viewer sign a "ministerial acts" form, showing that there was no "agency relationship" set up (which I doubt they did), they are likely owed a small "showing fee" which would come out of the commission that your agent would receive.
2 votes Thank Flag Link Sat Mar 29, 2008
Alan May, Real Estate Pro in 60201
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The issue here is procuring cause. If you use another agent to write up the offer, the listing office may not pay him/her a commission. The agent that showed you the property may be able to act as a buyers agent, but I am not sure of your state laws. In Massachusetts we have designated agency, which means 2 agents within the same office can represent the buyer and the seller on the same transaction, one acting as a sellers agent and the other as a buyers agent. I would talk to the office manager and ask that they explain how you would be represented in this case.
2 votes Thank Flag Link Thu Nov 8, 2007
If the associate worked in the same office as the listing agent then that agent is probably employed by the same broker as the listing agent.

When the showing agent and the listing agent are employed by the same broker and there was no pre-existing relationship between the 'showing agent and yourself....

then the two agents are considered to be "disclosed dual agents"

Unless you have previously waived your right to have sole representation, you may respectfully reject the offer of dual agency and exert your right to bring in an agent who is employed by a different broker, thus preserving your right to be represented by an agent who has fiduciary responsibility only to you.

Disclaimer: I am not a real estate attorney. I am writing a generalized answer to the limited information that consumer Trina B was able to post in the question box.
2 votes Thank Flag Link Thu Nov 8, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
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No, Trina, you are not obligate to use her as your buyers agent - unless you signed a buyer agent agreement with her. A disclaimer - I am in CA. So, IL might have different rules, but I have not seen that on this board.

The only one I know might do that is New Home Developments. Quite a few new home developers have the rules of requiring an agent to sign you in when you first view the home; and if you don't have an agent who brings you to view the new homes; then even if you have a Realtor, your realtor can not be involved if he did not sign you in. That's the one thing that might be different. .

As far as resale is concerned, I don't think you are obligate to use the agent who showed you the house because the listing agent would not come and show it to you.

In this case, i will be especially careful about who I pick as a Realtor - somebody who will protect YOUR interest instead of theirs.

Sylvia
2 votes Thank Flag Link Thu Nov 8, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
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I really hate to belabor the point which you are missing. Up until perhaps the last 3 or 4 years at most, buyer agency was almost unheard of in metroplitan New York. The seller was our client, period. Eventually buyer agency started to evolve, but VERY FEW IF ANY brokers became exclusively buyer representatives. Therefore, if a buyer wanted representation he went to an office that was bound to want to show him office exclusives along with other listings. The result was dual agency..........with a designated agent. How else could it possibly be handled and give the buyer and seller a licensee to assist them. Admittedly, exclusive representation in these cases could not exist, but at least the buyer did have their interests somewhat protected. To eliminate dual agency and designated agents would mean that I could not repesent a buyer if I wanted to show our office exclusives. What would you have us do, send them to another broker? Or would you suggest that if we represent buyers we not show them our own exclusives......silly thought. Perhaps in years to come when and if there are more brokers who specialize in buyer brokerage I might lean more to your way of thinking, but until and unless you understand the marketplace as it exists here, you cannot understand the need for dual agency and DA. You cannot compare this market with others that are chock full of buyer broker offices, I don't even know if there are many of them upstate. By the way, in case you didn't know, we have decidedly segmented markets in New York. Hundreds of agents have probably never sold a single family home in their entire careers and yet earn hundreds of thousands of dollars each year. They sell cooperatives or condominiums. Others sell primarily multi-family owner occupied one to four family units, etc. Others sell farms and rural acreage. Residential single family prices range from $100,000 to twenty million, etc. As with all states, the rules must be written for all markets. Again, dual agency and DA is the best possible way of dealing with the marketplace as it has existed in the past and still exists today. Perhaps tomorrow will call for different guidelines. Another thought, you were somewhat disparaging about the makeup of the State Board. Who else but brokers and real estate related people would you suggest serve on these boards? Would you prefer doctors, or school custodians or garbage collectors. I would always opt for a commission of my peers.
1 vote Thank Flag Link Thu Sep 17, 2009
you are missing the point. First I didn't say anything about damning me or real estate, etc. Second, again the State Board doesn't make law, we all know that, I don't know why you keep bringing it up, third Sandy Treadwell has been gone for years, Fourth, Madoff scammed people all over the world, I bet there are even people in Wisconsin who invested in funds that were linked to Madoff, finally, a great many people disagree with your opinion of designated agent. Once more, if it is fully disclosed and used correctly with full consent and understanding, then so be it. People are intelligent enough to make choices as long as those choices are fully explained. Give them credit for being able to understand options that are offered. If you feel so strongly about D.A., don't use.....no problem at all
1 vote Thank Flag Link Thu Sep 17, 2009
I am very familiar with this and it is exactly as I stated.....it went through the State Real Estate Board and the legislative process as outlined in NY law. What is your point?
1 vote Thank Flag Link Thu Sep 17, 2009
I guess being in Wisconsin you are the authority on New York law. Congratulations. We are not an imperial state and the Secretary of State does not, independently, make any "rulings" or changes in license law. Everything goes through a very long legal process, involving a State Real Estate Board (not a Board of Realtors) which includes 15 very well educated real estate professionals. It then goes through the legislative process and then back to the Board and then there are pubic hearings, before being enacted into law. Get your facts right oh mighty guru of all things real estate before you post nonesense.
1 vote Thank Flag Link Thu Sep 17, 2009
In New York there is a mandatory disclosure form which must be presented to every buyer seller landlord and tenant in a one to four family real estate transaction. It explains agency and gives the parties the opportunities to have an agent represent them or not. It also fully explains dual agency and dual agency with a designated agent. I disagree that buyers are not willing to sign anything. If the need for a dual agency becomes apparent and the buyer and seller are represented by the same agent, naturally the same broker is involved, otherwise it wouldnj't be dual agency, then a designated agent is brought into the picture to advocate for one of the parties. There can be no breach of agency requirements, but there is someone on each side of the transaction to level the playing field. People will generally refuse to sign something that has not been fully explained to them and something in which they perceive no derived benefits. If an agent takes the time to carefully explain the options, the public will sign. I have been in the real estate business for 40 years and during the past 30 have been a real estate educator. I can assure you that the model for agency in New York is excellent in that the agent must have a conversation regarding agency at the first substantive meeting, meaning prior to even discussing real estate. This includes attendees at open houses. As far as procurring cause, it is not merely the introduction to the property that creates procurring cause, but the ongoing actions of the licensee to complete the transaction. Just because you show the property does not entitle you to commission. This is a ridiculous notion. If someone is out with their family and happens upon an open house sign, walks in and likes the property, why should he be obligated to buy it from the agent who he has never met and may not want anything to do with. Someone posted that a lazy agent sitting around shouldn't be entitlted to the commission because he wasn't the first to show the property. Nonsense. If I build a good relationship with a buyer and they just happen to learn about a property, I would expect to have the opportunity to put the transaction together. Also, unless I have an exclusive with the buyer, I have no claim on them. I may be a buyer agent, but they have the right to work with whomever they please unless I have an exclusive. It seems to me from reading many of the posts that most of the problems revolve around the lack of state laws requiring disclosure of agency.
I hope this is helpful.
DLS
1 vote Thank Flag Link Thu Sep 17, 2009
Does anyone think it's possible Trina has resolved this issue since Nov.8 2007?
1 vote Thank Flag Link Thu Sep 10, 2009
Hi Trina,

Is there a problem with the agent that showed you the house? This would lead to a dual agency situation and if you go to another Realtor and write an offer, it could lead to a procuring cause issue between the realtors. First is the dual agency, there is nothing wrong with dual agency and the Realtor that showed the house to you can write your offer and work as your agent. There is nothing another agent can do different for you in this situation, so why not use the agent aht showed you the house? The second, involves you indirectly.. the procuring cause side, if you choose to go to another realtor to write the offer and it is accepted and closes, the orginal Realtor can/should file with the real estate board to get the commission from the other Realtor for this transaction as he/she was the reason you saw this house.

So, would you want to put another Realtor in the position to work to close this property just to lose the commission at a later date?
1 vote Thank Flag Link Thu Sep 10, 2009
Initial contact with the purchaser
(1) Who first introduced the purchaser or tenant to the
property?
(2) When was the first introduction made?
a) Was the introduction made when the buyer had a
specific need for that type of property?
b) Was the introduction instrumental in creating the
desire to purchase?
c) Did the buyer know about the property before the
broker contacted him? Did he know it was for sale?
d) Were there previous dealings between the buyer and
the seller?
e) Did the buyer find the property on his own?
(3) How was the first introduction made?
a) Was the property introduced as an open house?
b) What subsequent efforts were made by the broker after
the open house? (Refer to Factor #1)
c) Was the introduction made to a different representative
of the buyer?
d) Was the “introduction” merely a mention that the
property was listed?
e) What property was first introduced?
Conduct of the brokers
(1) Were all required disclosures complied with?
(2) Was there a faithful exercise of the duties a broker owes
to his client/principal?
(3) If more than one cooperating broker was involved, was
either (or both) aware of the other’s role in the
transaction?
(4) Did the broker who made the initial introduction to the
property engage in conduct (or fail to take some action)
which caused the purchaser or tenant to utilize the
services of another broker? (Refer to Factor #4)
(5) Did the cooperating broker (or second cooperating
broker) initiate a separate series of events, unrelated to
and not dependent on any other broker’s efforts, which
led to the successful transaction – that is, did the broker
perform services which assisted the buyer in making his
decision to purchase? (Refer to Factor #4)
a) Did the broker make preparations to show the property
to the buyer?
b) Did the broker make continued efforts after showing
the property?
c) Did the broker remove an impediment to the sale?
d) Did the broker make a proposal upon which the final
transaction was based?
e) Did the broker motivate the buyer to purchase?
(6) How do the efforts of one broker compare to the efforts of
another?
a) What was the relative success or failure of negotiations
conducted by one broker compared to the other?
b) What was the relative success or failure of negotiations
conducted by one broker compared to the other?
(7) If more than one cooperating broker was involved, how
and when did the second cooperating broker enter the
transaction?
Continuity and breaks in continuity (abandonment and
estrangement)
(1) What was the length of time between the broker’s efforts
and the final sales agreement?
(2) Did the original introduction of the purchaser or tenant to
the property start an uninterrupted series of events
hindered or interrupted in any way?
a) Did the buyer terminate the relationship with the
broker? Why? (Refer to Factor #4)
b) Did negotiation break down?
(2) Was the buyer representation agreement(s) in writing? Is
it enforceable?
(3) What were the terms of compensation established in the
buyer representation agreement(s)?
(4) Was the buyer representative(s) a broker or firm to which
an offer of compensation was made by the listing broker?
(5) Was the buyer representative(s) action in accordance with
the terms and conditions of the buyer representation
agreement(s)?
(6) At what point in the buying process was the buyer
representation relationship established? (Revised 05/03)
Nature, status, and terms of the offer to compensate
(1) Was an offer of cooperation and compensation made in
writing? If not, how was it communicated?
(2) Is the claimant a party to whom the listing broker’s offer
of compensation was extended?
(3) Were the broker’s actions in accordance with the terms
and conditions of the offer of cooperation and
compensation (if any)? Were all conditions of the
agreement met?
Initial contact with the purchaser
(1) Who first introduced the purchaser or tenant to the
property?
(2) When was the first introduction made?
a) Was the introduction made when the buyer had a
specific need for that type of property?
b) Was the introduction instrumental in creating the
desire to purchase?
c) Did the buyer know about the property before the
broker contacted him? Did he know it was for sale?
d) Were there previous dealings between the buyer and
the seller?
1 vote Thank Flag Link Thu Jun 5, 2008
I'm all for "should be explained" to the buyer. They should be asked "Are you working with an agent, or have you signed an exclusive buyer's agreement?"... I think we're all in agreement on that one. If they say yes to either of those, clearly they should be redirected back to their agent... again, all in agreement.

If they say no, they should be told that "if I show you this home, and you decide to purchase it, I may be considered your buyer's agent on this deal, and that would mean it would entitle me to the commission on this sale... are you okay with that"?

I'm comfortable saying that should be happening... and in some cases IS happening... but I do understand that the issue you're trying to raise is that the consumer is often not aware, and sadly uninformed about his potential future lack of choice.

I do not, however, consider it the sinister "stealing of the consumer's rights" and "trapping the client into a secret contract".
1 vote Thank Flag Link Tue Jun 3, 2008
Alan May, Real Estate Pro in 60201
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Once again, to stick to the original question:

The listing agent did not show the property to the Buyer. He sent "one of his associates". The Buyer at that time "had not engaged a buyer's agent yet." So if the "associate" would have asked, "Have you already signed a Buyer Agency Agreement with another agent or brokerage, the answer clearly would have been "No."

This is where the problems begin. The agent then proceeds to show the home WITHOUT telling the Buyer that if they decide they like the house "she would be the one to write up the offer."

All we are saying is that this should have been disclosed to the Buyer BEFORE showing the home, not after. In fact, it probably should have been disclosed to the Buyer before meeting at the home to see it.

Once again, I will reiterate that the Seller hired the listing agent to show the property to Buyers and to get the home sold. THAT is what earns the LISTING side of the commission.

Yes, the Buyer is always free to hire another agent, and yes, there are ways to protect that agent's compensation, but the fact remains that the public isn't aware of this and many agents are confused by exactly how to handle this situation as well.

In this day of information, Buyers are becoming more educated and will one day (hopefully) understand what is happening in the real estate purchasing process in spite of agents who are unwilling to honestly disclose such things as agency relationships and procuring cause.

In this case, the agent who showed the home openly asserts that they believe they have "trapped" the Buyer as their client (designated, dual or otherwise). ("I will be the one to write up the offer if you want to buy this home")

Remember, this was not the listing agent that showed the home. For all we know this person was licensed yesterday and the Listing Agent said, "Hey, I have someone who wants to look at the McGreedy place. Go show it to them and you can represent them as the Buyer."

Shouldn't the Buyer be able to CHOOSE if they want this agent to represent them? And if they choose not to use that particular agent, shouldn't the agent they choose be compensated from the funds the Buyer brings to the transaction?
1 vote Thank Flag Link Tue Jun 3, 2008
Jeannine said: "The buyer has the right to choose anyone they want. You try to fight it in court and you will loose. The buyer rules and the agent gets screwed .. It is all part of the business."

"The buyer has the right to choose anyone they want." -- I can't argue with that at all. They are free to choose (but choices have consequences).

"You try to fight it in court and you will lose." ---- What is the "it" you are going to fight in court and what is it that you are going to lose? How are you going to get past an arbitration clause to even GET to court?

"The buyer rules and the agent gets screwed ... It is all part of the business." ----It would appear from this statement that procuring cause doesn't exist. That is only the case in the mind of buyers and then only because proper disclosures have not been made to them. When buyers go into Realtor World where COE/Standards of practice section 17-4 under Duties to Realtors (http://tinyurl.com/4cbf5l ) trumps the duties to clients and customers sections and they have not been "mirandized" (As Jay has said) regarding agency AND procuring cause they (and their agent if they managed to get one) can end up the ones being screwed.

It is long past the time when just saying "...It is all part of the business" is the answer to a real problem that needs to be solved for the benefit of consumers AND REALTORS.
1 vote Thank Flag Link Tue Jun 3, 2008
Let's not get started. I agree that Procuring Cause is NOT based on law. As you state, in a court of law there would be no Procuring Cause because the court recognizes contracts and as you state, the Buyer can always contract with whoever they want.

You are just as correct when you imply that you could ignore Procuring Cause if you were not a REALTOR (R). Unfortunately, in my area, if you choose not to be a REALTOR you are denied access to the MLS. You cannot purchase an MLS subcription if you are not a REALTOR. That makes it pretty difficult to do business.

All we are saying is that the Buyer should be made aware of the fact that if they see the house with a particular agent, that agent or that agent's brokerage could lay claim to any compensation received by any other broker that Buyer chooses to represent them (Yes, even if paid directly by the Buyer).

That is all we are saying.

Inform the Buyer so they can make an informed decision. If they still choose to see the home knowing the ramifications, so be it. But at least they were informed and understood exactly what they were giving up.
1 vote Thank Flag Link Mon Jun 2, 2008
What is to stop Buyer's seeking last minute compensation? A Buyer-Agency Agreement.

Ours is a legally binding document. As long as the Agent fulfills their duties to the Buyer competently their fee is earned from the Buyer. If the agent is incompetent or fails to perform their duties, they are in breach of contract and probably should not be paid.

Once again the problem boils down to consumers being unaware of their options until it is too late. If consumers had been aware that an agent routinely failed to perform their duties or failed to act appropriately as a fiduciary, they wouldn't have hired that agent in the first place.

If your contract contains a "you can fire me as your agent at any time for any reason or no reason at all" clause, you had better hope Procuring Cause doesn't disappear because that may be the only way you ever get paid.

Professional Agents should play it straight with consumers.

I know many (MANY) agents who simply will not participate in a transaction that involves Dual Agency. Many of these same professionals would NOT assert procuring cause on an unsuspecting Buyer, just for showing them the home. They believe that:

SHOWING THE HOME TO PROSPECTIVE BUYERS IS WHAT THE SELLER HIRED THEM TO DO!

They also know that working as a single agent for their client, the Seller, is also what the Seller intended for them to do (even if they "agreed" to Dual Agency in the listing agreement because it wasn't properly explained to them then, either).

They know that letting the Buyer bring their own representation to the transaction all but eliminates a number of potential disputes, lawsuits, arbitrations and mediations. Is it really fair to the home buying consumer to drag them through such costly, stressful and time consuming endeavors when it all could have been avoided by simple up-front and honest disclosures? I ask, Is it really worth it to you? It isn't worth it to me. I value my time, health, conscience and family too much to set myself up for such things.

Let the Buyer CHOOSE to work with you or someone else in your company if they knowingly make that choice. But also, let the Buyer CHOOSE to hire someone else to represent their own best interest in the transaction without "procuring" their agent's fee from them against their knowledge...
1 vote Thank Flag Link Mon Jun 2, 2008
The question: "Are you working with another agent?" has nothing to do with the scenario the Home Buyer is seeking a response to. It would appear from the content of the question, that the Buyer did NOT have another agent at the time they were shown the home. But perhaps they got a bad vibe from the agent who showed them the home, or perhaps they simply want to make sure that they hire an agent who will fully represent them on their side of the transaction with full fiduciary duties throughout the transaction, including no shared fax machines, water cooler talk etc. etc.

If the agent or brokerage is going to assert procuring cause after showing the home, the Buyer should be fully informed of that before they give up the compensation that would normally be paid to their own representative from the transaction.

As has been pointed out, the Buyer brings the funds into the transaction that pay for the property and (in most cases) the real estate professionals' compensation.
1 vote Thank Flag Link Mon Jun 2, 2008
Benjamin,
I don't know if it is possible to get most consumers to understand procuring cause when so many Realtors have trouble with it. (Of course some Realtors WANT to have trouble with it.). If consumers ever really look at the Standards Realtors supposedly follow I don't know that they would feel comforted. Section 17-4 of the standards at http://tinyurl.com/4cbf5l would enlighten only a very few. Knowing the concept exists is one thing, knowing how it works and where their actions fit in, is quite another. If buyers/consumers ever get close to the comfort level with a buyer agent agreement that sellers have with a listing agreement they will be far far ahead. And, I'd predict that overall service would improve and commissions would drop - to the benefit of both good Realtors and consumers.

Paul Howard
1 vote Thank Flag Link Mon Jun 2, 2008
JR in New York said, "Some agents do not explain agency thoroughly, I'll give you that, but procuring cause is not to my knowledge something that is required to be explained."

The problem I see is exactly that: "procuring cause is not to my knowledge something that is required to be explained."

If a Buyer is giving up the ability to see the home with their own representative (and have that representation paid for in the normal cost of the transaction), I believe a Buyer SHOULD have that explained to them.

When all agents represented the Seller, Procuring Cause was appropriate. Now that educated Buyers want and seek out their own representation Procuring Cause should be put to rest, or as some agents have stated, it should at least be explained to the Buyer before locking them up against their knowledge.

Doing otherwise is anti-consumer.

The problem is that most consumers don't even know that such a thing as Procuring Cause exists. They only find out about it AFTER they are told that they are free to get their own agent, "but we won't be compensating them like we would have if you had decided not to look at the home with us."

This is why the consumer asked the question. If the agent had explained this up front, the question would never have been posted here.
1 vote Thank Flag Link Mon Jun 2, 2008
Elvis, now that ' Clark Kent" has revealed where his/her license is I'm guessing that license was obtained fairly recently at least since Illinois designated agency law was put into effect. And probably long after.

Lets see: An agent in a designated agency state is a 'designated' buyer agent. But they have their own listings too. My oh my. What do they do then when their buyer suddenly decides they like one of their designated buyer agent's listing better? AFTER, the buyer has disclosed all sorts of information they would want kept confidential from the seller or the seller's agent - what do they do?. Suppose the buyer is torn between the two properties. What a dilemma. There must be a solution that would give comfort to a buyer. Somewhere.
1 vote Thank Flag Link Mon Jun 2, 2008
Jay,
You are absolutely right. The issue is disclosure. Realtor World doesn't require disclosure of what you call "Procuring Cause" though. The Code of Ethics/ Standards of practice are there to protect Realtors not consumers. That disclosure should have a legislative/legal solution but so far it does not.

Sylvia, If every buyer were required to sign an 'Buyer Agreement" with their Realtor there would not be all that jumping around you refer to. Buyers would think a little more before they pick up the phone and there would be a lot less of them calling the listing agent and walking into Realtor World where they get lost like rats in a maze.

Paul Howard
1 vote Thank Flag Link Mon Jun 2, 2008
Has anyone notice that rather than agents, the many of the problems seem to begin with sellers and the majority of problems stem from buyers? On this and many other threads, buyers want to know how to go around agents, switch agents, use different agents to write offers that were unsucessful with their first agent because somehow it's the agent's fault, buy FSBOs and cut out the agent. And yet people accuse the agents of acting unethically.
1 vote Thank Flag Link Mon Jun 2, 2008
Trina B, The basic issue is not any obligation you have to use the agent that showed you the house. You have no such obligation. The problem is, the agent showing it to you did not tell you (prior to your looking at the house), he/she would expect to be paid if you bought it. That expectation may or may not be justified. How you handle it (even at this late date) might affect whether or not the expectation is justified.

If the only thing the agent did is open the house and let you walk around and look at it, that is a pretty flimsy action upon which to base a commission. Flimsy though is sometimes good enough. The agent also did not tell you of the potential that if you subsequently retained another agent that agent's commission might be taken away from them after your settlement. Walking through the door to that house put you into Realtor World. Realtor World is the place where the Realtor Code of Ethics/Standards of Practice section on "Duties to Realtors" , beginning at Article 15, trumps the section "Duties to Clients and Customers" beginning with Article 1. You would also do well to know the difference between a client and a customer. (see Standards of Practice 1-2)

Consumers should find section 17-4 of the Realtor Standards of Practice of particular interest.
You can find the current (as of 1/1/2008) Standards/Code of Ethics here. http://tinyurl.com/4cbf5l

Paul Howard
1 vote Thank Flag Link Mon Jun 2, 2008
Clark Kent (I'm sure that is his real name) said this:

"For instance if I am sitting an Open House and a person walks in to see the house that doesn't mean i procure cause. They are coming in as a customer and not a client. Besides what Realtor in their right mind sits their own open houses? You sit someone elses and vice versa so that if someone does come in and want you to represent them you avoid dual agency?"

There are so many aspects to the statements/arguments made here it is hard to know where to start. The comment made by "clark kent" above it typical of ( especially inexperienced) agents that don't know who they are an agent of. They 'think' they are the agent of a consumer. They are not. They are the agent of the company where they hang their license. That COMPANY is the agent of the consumer. Therefore, you cannot avoid dual agency by sitting the open house of someone else in the same company. That is so basic to this industry that it is shocking that some don't know it. Kent didn't even bring up the 'designated agency" argument so I assume he (or she) doesn't work in a designated agency state.

Paul Howard, Broker
NJHomeBuyer.com Realty
Cherry Hill NJ 08002
1 vote Thank Flag Link Sun Jun 1, 2008
My, but aren't the anonymous ones coming out in droves. And with such enlightening comments, too! Let's get a bit more specific, with our links, to help consumers understand what's really at hand...

This one's about the problems with Designated Agency, which my efforts kept out of the State of Wisconsin the first time it was put forward by the Wisconsin Realtors Association:

http://www.real-reform.org/email/index.html

This one if from the failed 2005 effort, where the fix was pretty much in from day one:

http://www.real-reform.org/criticism_of_wra_agency_drafts.pdf

Had my federal antitrust lawsuit to break the tie between my local board and multiple listing service been successful, the intent was to reform the abusive aspects of realtor procuring cause, injunctively. The ones that trap buyers and restrain buyer agent trade. That suit went to the doorstep of the Supreme Court of the United States and was denied Certiorari, just like 98 percent of all cases appealing for a hearing before SCOTUS.

By now, anyone interested has seen http://www.real-reform.org/pc.pdf .

Here's a link to an interesting eBook by my former antitrust attorney, David Barry:

http://www.barryfirm.com/dnld/Nine-Pillars-Citadel.pdf

It won't be favored by many of the "agency law experts" who frequent these forums, but I can tell just from reading the comments in this thread that very few of you have any understanding of common sense, common law agency--and concepts like implied agency--or how terribly conflict of interest ridden and disclosure deficient the concepts of designated agency and procuring cause are.

But, that's okay. The things I write, I don't write for you. I write them for consumers, and have received many, many thanks...and many, many clients, as a result of the things I have said/done over the course of the past twenty years.

In closing, just let me tell you how much the general attacks on my writing have amused me. Like so many who have gone before you--I've been out here speaking my piece on the internet since 1995--your attacks are without specificity.

Or when you do get specific, you are so far off the mark that engaging in conversation with you about the subject matter would take far more time than what I have available, as your foundation of knowledge is woefully inadequate. Try learning about the common law of agency and also about trust law. (Not trust ACCOUNT law...TRUST LAW.)

These two bodies of law are the wellspring from which client/agent relationships have flowed, from times which predate the founding of this nation. They are based on common sense principles, unlike the sales-based and liability reducing principles of Designated Agency. All you apologists can do, is argue from the standpoint of self interest, the Raison d'Etre of Designated Agency. You do not know what it means to labor to a higher standard...that of the common law of agency, where the interests of the client must be put ahead of all others...including those of the agent/firm.

That, however, is an idea which I'm sure is like Kryptonite to certain "heroes" of this conversation thread.
1 vote Thank Flag Link Sun Jun 1, 2008
Emily,

It goes beyond passion. Getting procuring cause to a point where it doesn't hamper a buyer's ability to get buyer agency services--without paying more--and the buyer agent's ability to provide those services without fear of being stripped of compensation is an obsession for me.

It's also going to end up giving NAR one hell of a black eye, when the home buying consumer finally wakes up to the sham.

The tone adopted by Alan/Elv!s early on did lead me to use some blunt adjectives. Moreover, his decision to put my PRIVATE email to him out here, at all--let alone without the full email to establish context--was not proper, by normal internet etiquette standards, either. (I took it private with him.)

Then, there's this character named Jym who is now apparently posting as Elvys. (Note the "y" in the name.) He sent me a private email titled "settle down" which threatened me with bodily harm, and also has now posted to this group another kind of subtle stalking threat, under the Elvys moniker. In over ten years online, this is the first time anyone has ever made a physical threat against me...and my style has often been--when talking about trade restraint, procuring cause and the like, harsh.

So, yes...I do apologize for getting personal, but I also do feel that the lack of quality answers and tone adopted toward what I have said, has been provocative, too.

Lastly, I do find it amusing how I'm getting all of these "thumbs down" reviews for what I've written. I can only imagine who is casting their vote, at this particular time. Hopefully this chain of discussion will survive long enough for affected consumers to find it, and offset the thumbs down votes coming from those who don't have sufficient knowledge of the problems with procuring cause.

Regardless...what I've said is true, and I'll stand by it for as long as it takes to see the necessary changes take place. Disclose agency relationships. Disclose procuring cause. Dismantle the trap.

http://www.real-reform.org/pc.pdf
1 vote Thank Flag Link Fri May 30, 2008
Hi Everyone,

It's great that you are all so passionate about your views on this topic but the insults need to stop. There's no need to call anyone a coward or stupid if you disagree with them and might I remind you that it's against our guidelines to do so:

BE CONSIDERATE
The community is made up of many types of people, with different backgrounds, knowledge and beliefs; please be considerate of others and do not attack other community members. Be respectful at all times.

RESPECT THE Trulia VOICES COMMUNITY
Every member is entitled to share their views on Trulia Voices. Do not insult other members because you strongly disagree with their views or for any other reason. Do not engage in hateful discussions, venting or ranting or use inappropriate language. We respect everyone's right to free speech but do not tolerate stalking, threats, harassment or inappropriate self promotion.

Thank you,

Emily Gibson
Customer Service Representative
1 vote Thank Flag Link Fri May 30, 2008
The original agent who whowed the property has procuring cause and will get the commision if the buyer buys the home BUT, Representation does not equal Compensation! The buyer can have anyone Represent them but they may not be Compensated. Procuring cause = Compensation
1 vote Thank Flag Link Fri May 30, 2008
PROCURING CAUSE is the Secret Contract. The form in the brochure is to keep buyers from getting shackled by procuring cause. Unlike those who would spring procuring cause traps, any buyer for whom I work signs a buyer agency agreement...and knows full well that an obligation has been created. No traps.

And, presuming none of you trap buyers either, does NOT mean that other licensees aren't engaging in the trap. Thus, the brochure. Thus, the crusade.
1 vote Thank Flag Link Fri May 30, 2008
Alan/Elvis,

It isn't that some procuring cause panels don't get things right. Some do. It is the notion that many don't, which keep buyer agents from extending services, and keep buyers from being able to use buyer agents at no additional charge.

That risk forecloses trade...and keeps many buyers from being represented. Illinois is no different than anywhere else in the nation, when it comes to realtor procuring cause. There can be NO predetermined rule, or outcome. You are at the mercy of what the panel decides, period.

That's too much of a risk, for many buyer agents. And it shouldn't be.
1 vote Thank Flag Link Fri May 30, 2008
Does anyone doubt that Trina would have refused to look at the property in question, if she were told up front about who represents whom...and that seeing the home with the listing agent--or any seller agent--would have resulted in her being required to use that agent? (At least if she didn't want to come out of pocket to pay a buyer's agent.)

That's the point. The buyer never had a chance to make a choice, because the buyer never knew that there was an obligation being created. AND THERE WAS. That's why I call Procuring Cause the Secret Contract.

Merely asking the buyer if they have an agent does NOT give the buyer enough information to make an intelligent decision. They don't know that procuring cause is sneaking up on them.

However...if every Realtor did have to give meaningful disclosure of agency...and had to tell that seeing a property with them was going to create an obligation to use them for that particular property, you can be damn sure that many, many buyers would stop, think and then hold off on seeing property until they knew whom they wished to use for THEIR agent.
1 vote Thank Flag Link Fri May 30, 2008
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