Implied Agency, Procuring Cause and The Impact on Home Buyers

Reblogger
Real Estate Broker/Owner with Robin Rogers, Silverbridge Realty, San Antonio, Texas 398351

This situation continues to crop up from time to time. Now that many housing markets are recovering and there is more real estate sales activity, it's a good idea to revisit this issue. Check out this informative post from Loreena Yeo:

Original content by Loreena and Michael Yeo #9001154

 

An implied agency in Texas is a broker and buyer relationship where there is no express agreement for broker to act as agent for the buyer. The actions, conversations and activities may lead to an "implied agency". However, the buyer may have a different set expectations from that meeting. than the broker performing the service. 

"We saw a house on the internet and called the broker who listed it to set up an appointment to see it. The listing agent sent another agent to show. We have not engaged in a buyer's representation. After showing the house, the agent mention that he would write up the offer for us. We are interested in the house but we want to use a different agent to represent us".

When a broker/ agent have not discuss and confirm the relationship and representation at the first meeting, the unrepresented buyer may assume that the broker/ agent is just out there to merely show houses to him/ her. The "bigger" issue of the unrepresented buyer will then be working for the Seller - whether or not, the broker/ agent is the listing broker/ agent. Thus, anything that the buyer says to the broker/ agent The "bigger" issue of the unrepresented buyer will then be working for the Seller - whether or not, the broker/ agent is the listing broker/ agent. Thus, anything that the buyer says to the broker/ agent could potential be too much information that may hurt the intention of purchasing the property.

In an "implied" agency relationship, this relationship is successful when both parties are in agreement to enter an "implied agency" relationship. However, more often than not, buyers simply want access to the property and not necessarily be in a business relationship with the broker/ agent who showed the property.

Implied agency or Buyer's agency is one of the clarifications needed in the example above. However, when the Buyer is interested with the property and wants to purchase the property now has a procuring cause issue. Procuring Cause is how a broker/ agent gets paid. Thus, if this agency relationship is not clearly defined at the beginning, it can cause Procuring cause commission disputes among agents. Disputes arise when "showing" agents think that they are the procuring cause to the sale while procuring cause is clearly defined as the agent who ultimately brought the buyer that cause the sale of the home, presented the offer, successfully negotiated the acceptance of the offer hence earned the commission he/she deserves.

Most consumers do not understand how brokers are paid. Hence, it is the agent's duty to explain. Buyers do not know that they open themselves to a can of worms when they speak to agents in which they have no desire to get in a business relationship with. The best way to protect yourself against procuring cause is:

  • Get into an implied agency specifically discussing buyer representation
  • Sign a buyer's agent agreement
  • Do not ask the listing agent to show you the property
  • Do not let another agent that you have no desire to get in business with to show you properties

 

I do not like implied agency and the problems it may cause. Upfront disclosures are needed to clarify the relationship so that there is no mis-communication or mis-representation or there lack of. The best relationship is affirmed in writing with a Buyer Representation agreement.

Some consumers (including brokers and agents) find it difficult to get into a signed buyer's representation agreement. They (both parties) feel like they are getting themselves tied down in a committed relationship without knowing each other. One way to resolve this issue is for both parties to sign a one-day buyer's representation agreement or representation based on the properties that were shown that day. That way, no parties are obligated to each other should that relationship not work out.

 

 

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Contact:


Loreena Yeo
Realtor®/ Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com

 

Super-serving Frisco, Plano, Dallas, McKinney, Allen, Little Elm, Prosper, Celina, Richardson, Dallas M-Streets, Dallas White Rock Lake area communities and other surrounding areas.

Copyright © 2009 by Loreena Yeo (3:16 team REALTY)
Originally Posted on Implied Agency, Procuring Cause and An Important Home Buyer's Education

Posted by

 

Robin Rogers, REALTOR, Broker-owner, TRC, MRP, CRS

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