Procuring Cause is the effort which brings about a desired result, often in producing the buyer for the property listing. This is perhaps one of the most misunderstood and misused terms among real estate agents and buyers in the industry. It can be confusing and frustrating at times but a necessary step in protecting both buyer and agent.
This complex issue has been the crux of NAR (National Association of Realtors) lawsuits and discrepancies for years. Their code of ethics states that procuring cause is the uninterrupted series of causal events, which results in a successful transaction.Simply showing the property or even having an agreement with the buyer does not automatically demonstrate procuring cause.
So how does a buyer’s agent get paid?
Buyer’s agents do not get paid from the buyer but from the commission on the sale of a property.Therefore, unless the property closes, the agent doesn’t get paid. This is where an agreement is so important. Too many agents have spent hundreds, perhaps thousands of dollars helping a buyer only to have them drop everything and either go with another agent or abandon the agent altogether. This is not to say that circumstances can’t arise where the buyer is unable to purchase but an agreement in place stating that should the buyer purchase, the agent with whom they have been working will receive the commission.
The topic of commissions is almost expected in every real estate transaction and if the buyer or seller hasn’t brought it up, the agent should. Full disclosure and fiduciary duty should be expected on behalf of the agent and this includes dual agency as well: where the same agent represents both the buyer and the seller (A sticky situation to be sure.) Ultimately, there is not one single act that determines who gets what which is why having all details in writing and signed is so crucial.
As agents, we are not allowed to place our commission issues before the support and good of the buyer and seller; they come first. The goal is to provide expert and professional service to both the buyer and the seller. The commission and procuring cause comes down to who basically caused the sale of the property.
In most cases, this is easy; the buyer’s agent showed the home and represented the buyer on one side while the listing agent listed and marketing the property for the seller. But in some cases, these lines can be blurred by buyers going through the listing agent instead of a buyer’s agent they have previously been working with.
For instance: Let’s say Bob and Pam have been working with Agent X for a month looking at homes and asking questions. One afternoon, Bob and Pam look at an open house without their agent and love the home so much they decide to place an offer right there. Without adequate documentation stating that their buyer’s agent will be paid a commission regardless of how the buyer’s purchased, the agent that has now spent time and money on finding a home for Bob and Pam could be out of luck. This happens far too much. Buyer’s have to consider if the tables were flipped; they worked hours for nothing. It can be very frustrating and tiring not to mention expensive. Agents only get paid when a deal closes. Too many open or broken deals means a broke agent.
If you’re a buyer – inform listing agents that you are working with a buyer’s agent. It takes the pressure off you and ensures that regardless of how you found the home, all the hard work the agent has put in up until this point won’t be in vain.
What if you don’t like your agent?
You are utilizing the services of the buyer’s agent and at any point you can fire your agent. If the agent is non responsive, doesn’t meet your expectations or you simply cannot get along, state your case and make it clear in writing that the relationship is terminated. You are not married to this agent until you find a house but this won’t fly if you have been getting along and the agent has been doing everything they legally should be doing and at the last minute the listing agent offers you a deal to use them instead of your buyer’s agent, you cannot simply fire them just to buy right away. The buyer’s agent can claim procuring cause in this case.
If there is an interruption in the service, meaning the buyer becomes estranged from the agent or the agent abandons the buyer. Only at this point can the buyer claim that the agent no longer works for them and cannot claim procuring cause of the sale of the property.
As a buyer you may feel apprehensive on signing a document promising to work with a specific agent but this is simply to protect liability. Again, with just cause and communication you are welcome to “fire” your agent, but it also protects agents in the case as mentioned above. Hours of work, time and effort all to be whisked away in one open house. By putting yourself in the agents shoes you can easily see why this is necessary. Even in cases where there IS a buyer’s agreement procuring cause can be disputed if the agent has failed to do their fiduciary duty in assisting the buyer as required. This does not necessarily give the agent a free ride to commission if they fail to perform their industry duties.
Communication is key. If the buyer understands the process, communicates with their agent and both are in agreement, the process is a no-brainer.
Yes, it’s tedious, yes, it’s detailed but it can also be easily understood with proper communication. Knowing all you can about how the agency works can help everyone involved in the transaction come out on the other end a winner.