Active Rain Master Minds April Challenge - Procuring Cause : How can we make it less of an issue?
Your buyer is under buyer agency contract and goes to an open house and the night before closing, you are notified that the open house listing agent is claiming procuring cause. You are told to preserve the sale and no commission will be released. Your thoughts?
Active Rain Master Minds April Challenge - Procuring Cause : How can we make it less of an issue?
What is procuring cause?
According to National Association of REALTOR®,
Quote" Procuring cause is in fact the interplay of factors which together demonstrate that the unbroken efforts of a specific broker were responsible for the buyer making the decision to consummate the sale on terms which the seller found acceptable. In other words, a broker who is the procuring cause of a sale is a sine qua non of the sale - the sale would not have occurred but for the broker's efforts." Unquote
The two most common types of procuring cause disputes are
- Disputes between the sellers and the listing agent.
- Disputes between MLS listing broker and the co-op selling broker.
Disputes between the sellers and the listing agent may end up in court because there is always a binding
listing agreement signed by both parties.
Disputes between the MLS Listing broker and the co-op selling broker are usually resolved through the local boards, since there are guide lines in place for arbitration when disputes occur.
How can we make it less of an issue?
First thing comes to mind is, easy, just sign the Exclusive Buyers Agency Agreement, right? Well, it depends.
In discussions with our local Real Estate Boards, the top six things they/we would look for to determine procuring cause are:
- Who first introduced the property to the purchaser?
- When was the introduction made? (Specially had the buyer previously seen the property with another agent)
- Did the agent who made the first introduction continue to engage the purchaser in dialogue?
- Did the agent provide all the data necessary to the purchaser to make a purchase decision?
- Was there a break in service? How long was the break? Why was there a break? Who was responsible for the break?
- Did the agent assist in preparing and submitted and offer to purchase?
Avoiding procuring cause disputes is the BEST solution, but when all efforts have failed, there is nothing left to do but good Communication and Great Mediation. You might lose in arbitration, but could WIN with Mediation.
We also think educating our clients about how agency representation works is another important step from first meeting with the client. Educate the buyers on how we get paid. Many of them do not have a clue. It doesn't matter if it is a 1st time buyer or a buyer with experience, we need to remind our clients we are their source of information on any listings on the market. If we are their buyer's agent, we need to represent their best interest. It is our job to show them how reliable we are. If our clients think they need information and attention from another agent, then we are not doing our job very well, are we? Of course, there are always exceptions even when we have done everything in our control to prevent it happen. From a consumer's stand point, some of them may just be concern with what is best for them, and what is in it for them. Some buyers will leave us and seek services from other agents who will provide inferior service just to appease the buyer in spite of any agreement that was signed. Loyalty plays an important role in a relationship between an agent and their client.
In addition to educating our clients, agents should seek more understanding about procuring cause. Where possible, agents should seek continuing education courses relating to procuring cause. Additional resources are easily obtained through the National Association of Realtor® website. http://www.realtor.org/LetterLw.nsf/pages/95procuringcausefactors?OpenDocument When agents are more educated on the subject themselves, it helps to address the issue accordingly.
Open Houses are another easy way to lose our clients if they are not accompanied by their agent. Not all
agents respect agency relationships and sometimes agents holding open houses will not abide by any code of ethics with respect to existing agency relationships of unaccompanied buyers. If the client "enters at their own risk" without prior coaching, they can be someone else's clients in an instant. Without question, our clients can go to open houses without us. However, it is our responsibility to coach them (our buyers) and ensure that they know to advise the on-site agent or builder that they are working with an agent already.
If an agent wants to be paid a commission, and prove procuring cause they need to be able to speak to their initial contact with their buyer, their conduct in finding the property, writing the offer as well as prove their continuity with that buyer.
photo courtesy : http://www.flickr.com/msamch
Serving Marion, West Memphis, Crawfordsville, Hughes, Horseshoe Lake, and surrounding areas. If you are planning to sell or buy, please feel free to give me a call, I will be glad to help you.
Rita Fong, REALTOR®
RE/MAX Real Estate Today
1813 Highway 77 Marion, Ark. 72364
cell:901-488-9590
office:870-735-4663
fax:870-735-4668
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