Home Buying in Denver>Question Details

Genavive, Both Buyer and Seller in Denver, CO

What would happen in this scenario? A buyer finds a house on their own via an open house, but they have an

Asked by Genavive, Denver, CO Mon Aug 24, 2009

agent that has been showing them houses previously, so they use that agent to submit an offer on the house and the offer is accepted. There is no written agreement between the buyer and this agent. The deal falls apart (due to financial issue on the buyer's part) and the buyer and seller agree to terminate the contract. The buyer at this time tells their agent that they will no longer need their services. Afterward, buyer finds out that the agent was considered a "transaction broker". If the buyer is able to fix their financial issues and wants to go back to the same house and place an offer either on their own or with a different agent/transaction broker can they do that? Is the previous transaction broker due any of the commission if the sale goes through?

Help the community by answering this question:


Hi Genavive,

I agree with the other agents. You never had a contract with this person and so they are not due the commission. I would be glad to help you submit an offer and earn your business.

Please call me and I would be glad to help.


Ethan Besser
Keller Williams
1 vote Thank Flag Link Mon Aug 24, 2009
As an aside, I would highly recommend that you sign an exclusive right to buy agreement and make sure that the "Buyer Agent" box is checked (not transaction broker). Best explanation I have heard is that it's sort of like the difference between a coach and a referee. A Buyer agent is like a coach, really working for one side (of course all transactions should be a win-win). A transaction broker is like a referee, working to assure the transaction makes it to close. In the agreement, the additional duties of the buyer agent, over and above those of the transaction broker, are clearly spelled out.
Best of luck. By all means feel free to contact me if you have any additional questions or concerns.

Chuck Strauss
1 vote Thank Flag Link Mon Aug 24, 2009

The key here is "There is no written agreement between the buyer and this agent." Without a written agreement, the previous agent is not due any commission. Had there been a written agreement there would have been a determined "hold over" period, during which the agent would be due a commission if the buyer went back to the previously under contract home. But since this is not the case as outlined above, I don't believe the agent has any claim.

I hope that helps,

John Keene
Keller Williams
1 vote Thank Flag Link Mon Aug 24, 2009
Ok so now I have learned about "procuring cause". I can say for sure that we found the house on our own. We just happened to stop by it because they were having an open house. I had also seen this house for sale months ago on the MLS, but was not interested in it because it was an area we weren't looking to move to and I also think it was listed at a higher price at that time. We called our agent after seeing it and told her we may be interested in taking another look and then that led to us going to the house two more time (once with our agent and once again on our own during an open house). We chatted with the seller's agent and also met the seller at that time and shortly after that we told our agent we would like to put an offer in on the house. At this point, I do not know if we will go back to that house again or not. I don't know how the seller would view us after terminating our current contract with him. We have a lot to think about, that's for sure. Thanks to everyone for their input.
0 votes Thank Flag Link Mon Aug 24, 2009

For further clarification, I wanted to add some more information to my previous answer. Seemingly small technicalities can make a big difference in the outcomes of issues. My answers are based on the question of whether the previous TB is due any commission if the sale goes through. I want to clarify, though, whether this commission is due by you or by the subsequent selling agent.

As my previous answer stated, a written buyer agency agreement or transaction broker agreement is not necessary for a broker to claim a commission based on procuring cause via arbitration. The reason it isn't necessary is because arbitration is solely between broker and broker--not between buyer or seller and broker. Arbitration is an internal function of a board of Realtors for their members and is governed by guidelines established by the National Association of Realtors. When a listing is posted on an MLS, the listing broker has to disclose how much commission will be paid to a buyer's agent and to a transaction broker who cooperates in the sale of a property. The disclosure in the MLS is a binding agreement between brokers who are members of that board of Realtors governing that MLS system. Since a transaction brokerage relationship between and buyer and a broker can be established legally by written agreement OR by default (no written agreement), that transaction broker can claim a commission for procuring cause from the subsequent agent based on the MLS agreement to pay cooperating transaction brokers. Without a WRITTEN buyer agency or transaction broker agreement between you and the previous broker, that broker may not have grounds to get a commission directly from you; however, it would not prevent him from getting a commission from the new selling broker. Of course, to do so, he would have to win his "procuring cause" claim through arbitration. I'm not saying that it even sounds like he was the procuring cause of the sale. As a matter of fact, it sounds more like he wasn't, but we on the outside can't claim to know every detail of the relationship and actions taken from both sides. It would be wise to give your new agent all the details of what transpired with the previous agent so that he/she can make a fully-informed and ethical decision about whether to contact the previous agent or not and clear up any possible misunderstandings in your purchase. Sounds like the previous agent has verbally stated that he's letting the issue go, but, just to be safe, it would be best if your new agent got something in writing from him to that effect.
0 votes Thank Flag Link Mon Aug 24, 2009
From what you've said, there are at least 2 things that I believe would make it nearly impossible for the agent to successfully claim any commission:

1. Lack of written agreement(s), and
2. Buyer found the house on their own.

In addition, as a practical matter, I can't imagine an agent having the guts to even file a claim when they were so careless in the first place.
0 votes Thank Flag Link Mon Aug 24, 2009

One crucial point that has not been addressed is whether or not the previous broker was the "procuring cause" of the sale. Basic idea of "procuring cause" is whoever initiated an unbroken series of events leading to the decision to buy. It is not required to have a buyer agency agreement in order to be considered "procuring cause" of a sale. If a Definitions of Brokerage Relationships wasn't presented by the broker, it probably wouldn't help the broker's case for procuring cause; but, that form, although required by the Colorado Real Estate Commission, isn't absolutely necessary to claim a commission if the broker can prove that he was the procuring cause. It sounds on the surface that your decision to try to buy the house was made independently from the broker's actions, but you would have to make sure that your decision to buy wasn't based on action, advice or information that came from the broker. If the former broker were to make a commission claim from the subsequent broker via an arbitration panel, that's what he would have to show. Buyers claim many different reasons for switching agents, but, in an arbitration hearing, the commission is awarded to the broker whom the panel believes was the procuring cause. The buyer's reasons for switching would be considered by the panel but don't necessarily determine procuring cause.

The lack of a signed Definitions of Brokerage Relationships is a serious issue but one that would actually be dealt with in a separate procedure from an arbitration hearing. It would actually have to be addressed in a complaiint to the broker's employing broker, the broker's board of Realtors, and/or the Colorado Real Estate Commission.
0 votes Thank Flag Link Mon Aug 24, 2009
When there is dispute over commission, the agent needs to show two things, a buyer representation agreement signed by both the buyer and the agent, and procuring cause..
They have made the mistake of not having a contract with the buyer, and didn't take the time to talk about open houses at early stages, because after all, this kind of scenario does happen, and agents should forsee it.
You must have solid reasons why you do not wish to have that agent represent you. But if the only reason is that the seller would save on the commission, and you would pay a bit less taking the agent off the equation, that's simply not fair because the commission is their pay check.
0 votes Thank Flag Link Mon Aug 24, 2009
We wondered that too Charles, but never thought to ask about it. I think we pretty nieve when we first started this process and have learned a lot these past months. We met this agent while house hunting on our own awhile ago and just kind of struck up a conversation and then ended up being shown houses by the agent. We have been dissapointed in his ablities, however, when it comes to negotiation and explaining contracts and such. We actually have had to bring some things to his attention that he missed in the contract and felt he should have seen it before asking us to sign. Our confidence in his ability has decreased to the point we feel we should part ways if we really want a chance to get into a new home. It's one of those cases of the "person" being wonderful and likeable...but the "agent" part isn't working out. We have to seperate the fact we like this person on a personal level, but we need an agent that can get the job done.
0 votes Thank Flag Link Mon Aug 24, 2009
We never knew there were such differences between types of agents until now. We asked the agent why we never received anything to sign or why we weren't told about what "kind" of agent he was and he said he mentioned it the first time we met, but that was months ago and we don't recall that if it took place. We are sure we never received anything in writing and the agent acknowledges that he never gave us anything. Thanks for your reply!
0 votes Thank Flag Link Mon Aug 24, 2009
I agree with both previous answers. What I can't understand is why the prior agent in this transaction (whether working as a buyer's agent or transaction broker) did not do the paperwork up front (before mentioned definitions of relationships and buyers agent agreement). In the way you have described this scenario, there is no commission due the prior agent.

Chuck Strauss
Keller Williams DTC
0 votes Thank Flag Link Mon Aug 24, 2009
Thanks John, I appreciate your input. The agent has said that the buyer's are free to go back to the house on their own, but they don't have anything in writing and they want to make sure they aren't doing anything wrong or unethical. They were thinking about calling the agent's broker to see what they say, but don't want to make an issue out of this or make any problems for the agent. (or themselves). If they pick another agent to represent them, they will be up front that they already had an offer fall through on the house and explain the situation. Thanks again!
0 votes Thank Flag Link Mon Aug 24, 2009
I agree with John. I would also offer this: The prior "agent" is obligated to provide you with a form very early in his/her dealings with you which clearly spells out the various possible relationships. Technically this is supposed to be provided the first time you talk, but that seldom happens from a practical standpoint. If I, for example, shoved this form under every single person's face the second we begin any conversation where real estate is discussed, I'd soon find myself talking to no one.

However - there's very little excuse for not taking care of this basic issue when (really, before) an offer is written. Of course, there's a lot of paperwork in real estate, so maybe you did get the form but just forgot.

Anyway - that form explains the differences between being an "agent" and being a "transaction broker". In Colorado, every real estate broker/agent/sales person/Realtor is a transaction all the time - with everyone - unless there is a specific, written agency agreement in place. This agreement spells out both rights and responsibilities of both the agent and the buyer (or seller), in writing, and for good reason - to avoid issues like you describe.

So - I agree. No commission is owed to the first person you worked with, and you're free to work with someone else if you'd rather.
0 votes Thank Flag Link Mon Aug 24, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer