Home Buying in Seattle>Question Details

Thresa, Home Buyer in Seattle, WA

If we don't have a signed agreement with a real estate agent and we want to purchase a house she went with us

Asked by Thresa, Seattle, WA Fri Feb 8, 2008

to, are we legally obligated to give her the commission? The reason I ask is because she did not find the house or technically show us the house.

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Answers

38
Procuring cause is not dependent upon a buyer broker agreement.

Black's Law Dictionary, Fifth Edition, defines procuring cause as follows:

"The proximate cause; the cause originating a series of events, which, without break in their continuity, result in the accomplishment of the prime object. The inducing cause; the direct or proximate cause. Substantially synonymous with 'efficient cause'."

The agent who showed you or "accompanied" you to the property may have a claim to commission as procuring cause. There is not enough information her to determine that.

As a buyer, you do not determine who gets the commission if it is in disupte. The commission payments are determined by the terms of the contract excecuted between the seller and the listing broker. Any buyer agent commission that is agreed upon is set forth in that agreement also. If more than one buyer agent attempts to claim that commission, the listing agreement, the rules of the local MLS and boards, and the facts will determine who gets the commission.
4 votes Thank Flag Link Sat Feb 9, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Thresa:

I can appreciate your question. Let me illustrate something that happened to me many years ago. I worked with my son's choir teacher & his wife and showed them almost 100 listings. We had the discussion regarding open houses (letting the site agent know they were working with me), ads, signs, etc. I wrote one offer up for them and then we couldn't put the offer together. They asked me to give them the weekend to make a final decision as to the actual community they wanted to live in. I said, great. I'll check in with you on Monday to see what you've decided so we can narrow the search. ON their way home, they stopped by a local community and saw a sign being put up in a neighborhood I had just shown them. They called the agent on the sign and signed a purchase agreement. I didn't find out until I called them on Monday. I even had a Buyer contract signed with them. I ended up not pursuing a commission but to this day cannot believe people I'd bonded with, had shown them that many homes, and had put my all into locating the perfect family home, would feel okay about giving 2 sides of the commission to a stranger who didn't even represent them.

Did I have procuring cause? No. But ethically, if you have worked with this agent for any time at all, and if that agent is knowledgeable, helpful, will guide you through the process appropriately, she should be used to buy this home you stumbled onto. The only way we get paid is through a closing.

The really good agents can walk you through the buying process in a way that will make it seem like a walk in the park on your end, but that agent is spending countless hours assisting you to make the best decisions when purchasing your home.
3 votes Thank Flag Link Fri Mar 14, 2008
Thresa -

Obviously you can see that people have strong feelings about this topic and for good cause...many people really discount the work that agents due and often try to take advantage of "all that money" that we make. I am proud that agents are defending our commission so well but dissapointed to see so many people making assumptions about your interests.

Ultimately, it is not up to you do negotiate the commission with your agent as that is in te tterms paid by seller at closing. To be honest you may get a "discounted" price without using an agent but that can also come back to harm you. Your agent does so much more than show houses...they will help coordinate everything during the entire process making it as easy as possible for you.

Your agent's job is to make sure that YOUR best interests are being taken care of during the entire process...not just the showing of the house. Also...you agent should help you negotiate a lower price...often making up for that "discount" that is given if you don't use the agent.

Depending on the circumstances...you may not be legally required to use this agent or anyone. But I would STRONGLY advise you to be careful here as this could really come back to bite you. If you have concerns about your friend talk to another realtor but make sure that you use one who will truly look out for your best interests.

That is a good agent's job...and if you are using a good agent you will see the value in him/her during the ENTIRE process...and commission shouldn't even be a concern.

Good luck on whatever you choose to do. Sorry that this forum has gotten very bitter and angry. Just understand that these agents are simply trying to defend the value in their careers while also trying to help you and other buyers understand that we are here to look out for your best interests!

Good luck!
Web Reference: http://www.agentsamuel.com
3 votes Thank Flag Link Sat Feb 9, 2008
Hi Thresa,

I'm not a big fan of the tone in "Capone's" response, although I agree with him in part. I don't agree with "Ardell's" statement that the Buyer Agent's fee is paid by the buyer within the sales price. I do educate my buyer's regarding real estate commission and here's the real deal: the commission is paid by the Seller to the Listing BROKER regardless of what the Buyer's status is (represented or unrepresented). The Listing Broker almost always (but not always) agrees to pay a Buyer's Broker a percentage of their fee if the Buyer's Agent brings a ready, willing and able buyer to the seller and a successful transaction is the result. Most of the time, the Listing Broker will keep the entire commission if there is not another Broker involved. Sometimes, the Listing Broker and the Seller will agree to a reduced commission if the Listing Broker brings in a ready, willing and able Buyer (does not have to pay a percentage to another Broker); in this case th Seller is more likely to accept a lower purchase price, but not always. The Seller may want to keep any savings for themselves.

Please, please, please do not think that all Realtors/Agents/Broker's have the attitude that "Capone" does; most of us take the "dual agent" position in a transaction seriously and we act accordingly. In Ohio, a "dual agent" can neither work for the Seller or the Buyer. In addition to Ohio law, some of us have ethical obligations and personal morals; I would never take pleasure in anyone's ignorance. "Capone" is right, I guess he does what's required by telling a Buyer it is in their best interests, but to "smile" about it - kinda twisted if you ask me.

For some reason you do not want to continue with your Agent - what is that reason? Is it strictly because you feel the Seller will reduce their purchase price? Is the Listing Agent agreeing to reduce their commission thereby encouraging the Seller to accept a lower purchase price? Do you feel that your Agent is not representing you properly? Has he/she not been working to find properties? Has he/she not been communicating with you? If you have a good reason (other than saving a couple grand), explain the reason to your Agent and get his/her response. Be honest with your Agent and you could avoid unnecessary "drama" and possible commission dispute/litigation. If you want a legal opinion, you should contact an attorney. Also, please take note of "Lisa Bosques'" information; the truth is that finding the right property is only a small part of a Buyer Agent's job. If you are confident that you know what the home is truly worth, in today's market, and you know exactely what you need to do to protect your interests from start to finish, then welcome to "self representation." If you are unsure - then either work things out with your current Agent or look into seeing if you can have another Agent represent you.

I wish you the best and I hope everything works out for you.
3 votes Thank Flag Link Sat Feb 9, 2008
Ardell -

Please stop reading into things more than they are meant to be read into...wow...talk about negativity today...usually you have great responses...not sure what happened today.

I would NEVER hide how I get paid from a buyer and ALWAYS discuss with them up front what I do to earn my money and how I get paid. This is even part of the Purchase and Sale agreement that we all walk through with them when writing up an offer.

I simply wanted to make sure that Thresa was aware that her agent will not just be earning her money from showing homes but should be a help to her all the way up until closing and beyond...after all, that's when we really earn our money.

I'm not sure why these postings have turned so negative...that is definately not the purpose and general tone of Trulia Forums...I'll quietly be bowing out now so as not to contribute anymore to the negative energy in here.
Web Reference: http://www.agentsamuel.com
2 votes Thank Flag Link Sat Feb 9, 2008
I assume you have a job and expect to get paid for the time you invest. Real Estate agents are paid soley on commission and pay all of their own expenses, including both sides of social security. In Washington State, you don't have to purchase a house with an agent unless you have a signed buyer's agreement. However, I would suggest that you interview and hire the best agent for your purposes and stick with one agent. You will get better service and the agent will work harder for you.
2 votes Thank Flag Link Sat Feb 9, 2008
Marti,

When I said "I Smile" it is because the person I am talking about procured cause with an agent, then backdoored the agent. I warned that she is better off being represented by a Realtor and she ended up paying my seller more. I smiled because I did my job getting my client the best offer from an idiot that backdoored her agent.
2 votes Thank Flag Link Sat Feb 9, 2008
Capone,

You said " if an agent brings in a ready, willing, and able buyer at full price..."

The Agency Laws in Washington State charge ALL agents to represent buyers, except the one and only and individual listing agent. We don't "bring ready, willing and able buyers to property at full price" as our duty to consumers in the State of Washington.

Here ALL agents represent buyers at first contact, vs. the seller, unless they are under contract with the seller.

We have Designated Agency with Buyer Agency being the default position. To the best of my knowledge, Washington is the only State with this type of Agency position by Law.
2 votes Thank Flag Link Sat Feb 9, 2008
Capone. You apparently do not practice real estate in Seattle where this questioner is from, and I represent buyers and sellers of real estate. Maybe you should consider that Seattle is a bit different than Chicagoland.
2 votes Thank Flag Link Sat Feb 9, 2008
Theresa....

The commissions are paid by the seller even with a buyer broker agreement.

Deborah gave a great defination on procurring cause. I would strongly suggest you be represented by a professional of your choice.

If you think you have or had a relationship with a Realtor and you do not plan to use them then it would be a good idea to make sure the relationship is terminated and I would do it in writing. Get represented and good luck with your purchase.
2 votes Thank Flag Link Sat Feb 9, 2008
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Ardell, I totally agree with you that as agents we need to have that discussion with our clients, and when it comes to friends/family it can be especially difficult.

And yes, it can be argued that buyers pay the commission within the sales price. But technically speaking it comes off of the seller's balance sheet at closing, and the commission gets paid out of the sellers proceeds no matter how low the price is negotiated (in proportion to the sales price, of course). Also, we price homes according to market value, not market value plus commissions.
2 votes Thank Flag Link Sat Feb 9, 2008
Ardell your full of it. The comission comes from the seller. For instance if an agent brings in a ready, willing, and able buyer at full price and the seller turns it down......... the seller technically owes that agent comission, please have a better comeback than ......Without the buyers money there is no sale yadda yadda yadda.
2 votes Thank Flag Link Sat Feb 9, 2008
Lisa,

The Buyer Agent Fee IS paid by the buyer within the sale price. It's time for agents to "get" that. Perhaps the fault lies in the friend/agent not being up front about the commission arrangements with her friend/client.

If we all would sit down and talk about commissions with our buyer clients the same way we do with our seller clients, and that change is here, there would be less confusion regarding what happens next in this scenario.
2 votes Thank Flag Link Sat Feb 9, 2008
Does anyone have a ten foot pole :)

Thresa, why don't you tell us why the agent shouldn't receive the commission? Would you feel the same way if the listing agent got to keep it? That is what may happen, unless the listing agent told you otherwise. If the listing agent did know you saw the house with an agent, and offered you the commission, there's going to be hell to pay. That agent would clearly be in violation of several rules.

Since this is your friend, why don't you simply negotiate the commission with her and tell her how you feel? Tell her you feel that as your friend, maybe she should not want to take the whole commission. But if you want to totally exlude her from the picture, the answer is simple...she is NOT your friend. More correctly, you are not HER friend.
2 votes Thank Flag Link Fri Feb 8, 2008
Thresa as another buyer I would recommend that you go through the agent that showed you the home. Not only is it the right thing to do but it doesn't cost you any money to use a buyer's agent. The seller pays the commission which is split between the buyer's agent and the seller's agent. My real estate agent has advised us on a lot of different issues that have occured after a contract was signed. We got through a home inspection and found about 10k in damages and she advised us how to get them to fix it and eventually how to get out the contract since they were not willing to fix the home. Good luck with buying your home!
1 vote Thank Flag Link Sun Mar 16, 2008
A buyer has the right to work with any agent of their choice unless they have signed a buyer broker agreement, procuring cause has been an ongoing problem with all of us agents and it is not easy to win! Just because an agent introduced the buyer to a property does not mean they deserve a commission, there are many other factors of criteria that must be met in order to be the procuring agent and even then if the arbitrating panel is not knowlegable with our professional standards process the agent still may not end up with a commission
1 vote Thank Flag Link Fri Mar 7, 2008
You are not obligated to pay a commission to your agent unless you are under contract to do so. That however doesn't mean that your agent will not receive a commission from the Sellers agents broker under the MLS cooperative agreements.

The MLS has extensive rules concerning commission payments to other agents and your agent can place a claim for it under the legal theory of "procuring cause", which basically means that you were introduced to that property by her.

In the past, many arguments have been made concerning procuring cause and the degree of work performed by the agent being taken into consideration. All arguments have failed when they concern such because under procuring cause the only factor that is considered is if you would or would not have first come into contact with the property if it were not for the agents efforts.
1 vote Thank Flag Link Fri Mar 7, 2008
Who did technically show you the house? Besides the showing: The agent that helps you buy deserves the fee. Buying means more than unlocking the yet unseen house. A good agent after establishing an offering price, drafting a 20 to 30 page purchase and sale agreement, negotiate w/ Seller, completing an inspection review, re-negotiate w/ Seller, assisting an appraisal, bank finance hurdles, work orders, re-re negotiate w/ Seller ...the process can become very intense. Stop trying to save a few bucks by dodging the technical aspects of procurring cause, find an agent you trust and like and sign an agreement for exclusive buyer agency. You should also avoid the rebate/refin/no service buyer brokers. The industry rejects these something for nothing agents that rely on full fees to lure Buyers in and then do nothing for the client accept tell them to do it themselves or get the sellers agent to do their job. Happy shopping. There are plenty of good values available
1 vote Thank Flag Link Wed Feb 27, 2008
Thresa, I am curious as to why you do not want your friend to have the commission
1 vote Thank Flag Link Sat Feb 9, 2008
Dear Thresa,

I want to apologize for my communication with you earlier. Samuel is right about the negative energy, and I'm sorry I contributed to it by addressing you in such a snarky tone. I am usually not like this, and I wouldn't want you to feel hesitant about asking another question to the Realtors here. Obviously this topic hit home for a lot of us.
1 vote Thank Flag Link Sat Feb 9, 2008
Samuel,

We all know that consumers are generally not privy to the inner workings of our "system". So I believe it is appropriate to treat the person asking the question as if their position is valid, and assume that the reason for the confusion is due to the fact that the agent didn't explain things well from the getgo.

I believe the negative energy is coming from the agents toward the consumer who asked the question in the first place. Agents may see me as being the "negative tone" here, but I see it the other way around based on the responses so far.

Clearly in the Seattle Area, somewhat due to the Redfin business model, agents can no longer pretend that the person showing the property is holding all the cards. Buyer Consumers have a right to electively choose their agent, and discuss the commission issues regarding their agent.

It's not been historically the case, but I expect all agents from this area to have a more open mind as to where we are right now, and it's not in the dark ages where agents told buyers which way is up and which way isn't, as to commission issues.

My previous responses were not directed to any specific agent, except the agent who doesn't have the decency to use his real name. Clearly licensed professionals should not be interacting in publicly available discussions using fictitious and offensive "monickers". It's childish, cowardly and exceptionally unprofessional for a licensed agent to post as "Capone".
1 vote Thank Flag Link Sat Feb 9, 2008
It is not a "good" agent's job to dupe buyers into thinking their services are free or worse yet, not their business at all. How can you have "a client" and then tell them your pay is none of their business or concern?
1 vote Thank Flag Link Sat Feb 9, 2008
Why DO you want to cut out your agent/friend?

WIthout a contract you are not "legally" required to use that agent. However in our "sue happy" society, would your friend come back and sue you for "Procuring Cause"? What are (and where are) your morals and values? Is there a valid reason? .
1 vote Thank Flag Link Sat Feb 9, 2008
There are many questions left unanswered. My first one is, how did she go with you to the house without technically "showing you the house?"

Many people think that all we agents do is "find and show houses". That is not the case; here's the short and sweet list of what we as agents do to assist the home buyer:

http://www.connectwithlife.com/home-buyer/getting-ready-to-b…

You left a lot of information out of your question, such as how long you've been working with this person and why do you feel the need to dump her right at the time that you truly need her services?

As usual, I'm prone to assuming the worst in people, that you've been using her services for a while, and just when you find something good, you plan to dump her and ask for a discounted price now that her commission is out of the picture.

If this is indeed what is happening, I urge you to continue with your "friend" if she is indeed a capable agent.
She'll represent your best interests and get you a better price AND TERMS than you can get yourself, I'm positive of that. The listing agent does not represent you, and what you want is your own representation.
Especially now that you were the one who got your agent involved in the first place.

I'm trying to keep my cool, but there are too many buyers out there who feel that the commission is "theirs to give". Buyers agents are paid by the seller through a contract that the seller has with the listing broker. It is not up for grabs. Agents work countless hours for free until they sell and close on a house, and then they use that money to support their families, much like you use your paycheck to support your family. Please don't ask someone for their paycheck, that is just not polite. Silly me, there I go assuming the worst again.
1 vote Thank Flag Link Sat Feb 9, 2008
Thresa,
If you don't have a signed "Buyer Agency Agreement" with the agent, you are not legally obligated to allow her to write an offer on the home. You said she didn't technically show you the home, but you also said she went with you to the house......please explain! Also, why wouldn't you want to let her represent you? You should have someone representing your best interest. As a previous person stated, you are not paying her the commission, the seller is. Using her is the right thing to do!

Cheri Klavano, CRS
Issaquah, Washington
425-417-6194
0 votes Thank Flag Link Mon Mar 17, 2008
At least in Virginia, an agent is not entitled to a commission unless she was the "procurring cause" in other words, responsible for the sale. If she did not find the house for you AND if you had not signed a Buyers Agent agreement with her, then you should NOT be obligated to pay her a commission. If, however, she spent a lot of time and effort showing you around, it might be the nice thing to do.
0 votes Thank Flag Link Sun Mar 16, 2008
Rosa's answer below is absolutely true.

When a buyer works with another agent without telling them about the previous one, it places the new agent in an awkward position when they may later learn about them. This could later cause problems between agents as well as a commission dispute resolution with the MLS.

Contrary to what many buyers may believe, listing agents are happy to share commissions with a buyers agent who helps them sell their clients property. This is what makes the MLS such a valuable tool as it allows each agent to show other agents properties without the concerns that they will or will not get paid for their efforts.

The buyer also places themself in a dangerous position when they do not use their own agent who will represent their interests. The duty of the listing agent and the loyalty is with the seller and they are obligated by law to fiercely protect those interests subject to law.
0 votes Thank Flag Link Sun Mar 16, 2008
Thresa,

If no agreement (buyer agency agreement) has been signed then you have no legal obligation to use her on the purchase. However, I would recommend using a buyer's agent to protect your best interest. Remember, the seller typically pays your agents commission so there really is no reason you should go it alone.
0 votes Thank Flag Link Sat Mar 15, 2008
Theresa,
Please note Debbie Barger response below. (She acutally does have a "procuring cause" case should she decide to arbitrate) but is representative of mos of us. We will expend our knowledge and assistance to our friends and customers and hope that it assists them in getting the "deal" they need to satlisfy their needs even if that means that they need to "cut" us out of the transaction. One thing we Realtors learn is that the "deal" tell us who our real friends are; both customers and fellow/sister Realtors. It can be quite "cleansing" to us,.
0 votes Thank Flag Link Fri Mar 14, 2008
hey ardell....can I borrow that ten foot pole for a minute?

Jean,

1) In California, the proceeds come out of the Sellers net at escrow BUT the BUYER in fact pays the commission (and usually finances it over 30 years) as it is built into the purchase price. There is no way you can convince me that if no commission was being paid to any agent (perish the thought) that the price of a given home would be the same!

2) Per the California RLA (residential listing agreement) Sec 4 A1 "If during the Listing Period, or any extension, Broker, Seller, cooperating broker , or any other person procures a buyer(s) who offers to purchase the Property on the above price and terms, or on any price and term acceptable to Seller. (Broker is entitled to compensation whether any escrow resulting from such offer closes during or after the expiration of the Listing Period.)"

Sec 4A simply states the commission percent total paid to listing Broker and then incorporates with an "AND" 4A1.

The MLS offering percentage to selling brokers constitutes a contract. Therefore the selling agent IS entitled to the commission offered for a full price, non contingent offer. Although rare, it is fully enforceable in court.

Finally please research "procuring cause" on the C.A.R. or N.A.R. website. This is what prevents unscrupulous listing agents from poaching buyers. You are correct about the benefit of a Buyer/Agent agreement being beneficial and helping draw the ethical lines. It is extremely unfortuate that the Buyer/Agent agreement is not a required form.

We all need to have the commission discussion with our Buyers as early as possible. They need to be edumacated on how our business works and who is paying what (and HOW!).

(Ok, who wants the pole next??)
0 votes Thank Flag Link Wed Feb 27, 2008
I think you are all off the subject, unless the buyer broker agreement is signed, the buyer does have the right to change agents, I do not respect buyers who change agents and do not have the decency to call the first agent and tell them why they are making a change!! And by the way, in California, just because an agent brings the seller a full priced contract, this does not mean the seller is responsible to pay a commission if the seller rejects the offer! All terms and conditions must also meet the needs of the seller! Also, in CA the seller pays the commission!
0 votes Thank Flag Link Sat Feb 9, 2008
Samuel,

I have a listing coming up over your way end of March or early April. I'll give you a heads up when I'm going to be doing the Open Houses. It would be great to meet you in person.
0 votes Thank Flag Link Sat Feb 9, 2008
There's the Ardell that I know and love to read answers from :)....I just wanted to make sure I defended myself...

...good points though too! I am not sure why this posting turned negative but I really think alot of it had to dues with the emotions agents have behind defending our commissions...and as you pointed out, the Red Fin model makes that even more important here in Seattle.

I also agree though...if you won't post your name to your responses...how can we know that it is valid advice as there is nothing to be held accountable too.

OK....I think this question has been adequately answered so this time I will actually "bow out" like I said...thanks Ardell for all your great posts though!
Web Reference: http://www.agentsamuel.com
0 votes Thank Flag Link Sat Feb 9, 2008
No signed Buyer-Broker agreement so I bet she can't win the procurring cause arguement... but I'm not a lawyer and this is not legal advice. More importantly, I think you have to weigh the value of your relationship to whatever value you're going to get by cutting her out of the commission. The only thing I didn't see in the other answers' questions back to you was whether or not you have a signed agreement with another Buyer's Agent? If you're obligated to another agent, then by all means set your friend straight by letting her know that are legally obliated to another agent. Otherwise, if she really is a friend, is there any amount of money you'd risk jeoporadizing a quality relationship???? If it's not a quality relationship... hey, this is your chance to end it.
Web Reference: http://www.SFisHome.com
0 votes Thank Flag Link Fri Feb 8, 2008
I am still confused. Did the listing agent tell you that if you cut out your "friend" that they'd give you a better deal or something? Why in the world would you jeopardize your friendship over this ? If the listing agent ends up being a dual agent, and representing you as well, your "friend" would likely have a procuring cause action against that listing agent since she did accompany you to the property. If its not the listing agent you are thinking of having write up an offer, then I can't imagine why, if you have a friend in the business you'd be seeking other representation?
Web Reference: http://www.diablovalley.net
0 votes Thank Flag Link Fri Feb 8, 2008
Thresa,
You answer is still confusing. If your friend, who is a real estate broker, showed the property to you acting in her capacity as a real estate broker, she could have a claim of "procuring cause". That does not concern you immediately but would be an argument that could be presented after you buy the house (if you did buy it through another broker). You need to sit down and talk this over with that broker so that you understand what all this means.
0 votes Thank Flag Link Fri Feb 8, 2008
She is a friend of ours. We were under the assumption that she was going with us as that because there was no discussion or agreement otherwise.
0 votes Thank Flag Link Fri Feb 8, 2008
The seller pays commission right? So how would you be giving the agent a commission? Why are you thinking she's not entitled to the commission and how did she go with you but not show it to you? I guess I'm not understanding...
0 votes Thank Flag Link Fri Feb 8, 2008
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