I had a prospective client I'll simply call "Client" whom I met in December 2007 and to whom I've shown properties. Until one day, he walked into an open house on a waterfront property that he liked.
OPEN HOUSE AGENT MADE OUTRAGEOUS CLAIM
The agent --- whom I'll refer to as Agent X --- holding the open house told him only HE can write the offer for my client, and that the chances of getting the offer approved would be greater if HE wrote the offer for him. It was a short sale, and this is the only house that Client saw with Agent X.
Client was almost embarrassed to tell me about it...and kept saying sorry that he went with the other guy. But he and his wife really wanted the house, and Agent X convinced him to write the offer.
As disappointed as I was, there was nothing I could do at that point. So I backed away.
Yes, I know....I should have had him sign a Buyer Broker Agreement.
But ....but.... :(
OFFER WAS NOT ACCEPTED
No, they didn't get their offer accepted. And along the way, they determined that they didn't want to have anything to do with Agent X whom they said was pushy and aggressive. Not to mention dishonest.
But Client continued to call me from time to time for advice and to say hello. I haven't shown them any properties any more. They need to sell some of their properties before they can buy another.
A YEAR LATER
Nearly a year later, the property on which they wrote the offer was foreclosed, and is now represented by a different brokerage.
Agent X calls Client and tries to persuade him to submit another offer. Client tells Agent X no way! Client doesn't want to work with Agent X ever.
Whereupon Agent X tells Client that they have signed an agreement for one year, and that Client owes him commission
- If Client buys this house
- and on EVERYTHING that he buys during this period of time.
How did I hear about this problem? The Client called me!
Agent X only showed the Client this one property that he was holding open for the listing agent of his brokerage. He wrote an offer for a short sale. The offer did not materialize.
Since then, May of 2008, they have had no other contact. Until the property came up as a foreclosure in Jan 2009.
Agent X says that if Client writes offer on the property that is foreclosed, using another agent, that Agent X wants to be paid on that sale, as well as future properties that the Client buys until the end of the agreement which the buyer doesn't remember signing (or maybe he just didn't understand)
CODE OF ETHICS
I researched NAR's Code of Ethics training online, to find case studies similar to this. And here are some thoughts from the course, that I want to highlight that perhaps may be helpful if Client buys another property and doesn't use Agent X.
The following info and quiz are quoted verbatim from the course.
Key Factors of Procuring Cause.
- A common misconception is that the party who first showed a property to the purchaser is automatically entitled to the commission. This is not the case.
- Similarly, writing the successful offer to purchase is not the sole deciding factor of procuring cause.
- The fact that a REALTOR® had a buyer agency agreement with the purchaser does not automatically entitle that REALTOR® to the commission.
A general definition of procuring cause is found in Black's Law Dictionary, Sixth Edition:
"The proximate cause; the cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime object."
Quiz Question: When can a REALTOR® deal or negotiate with another REALTOR®'s client who is subject to an exclusive agreement?
Answer: If the client initiates the dealings