Open House - Procuring Cause Arbitration Filed

By
Real Estate Agent with Realty Executives Fox Valley

I had worked with my clients over seven months and they did purchase a home, through me. Three months after the closing my broker received an arbitration notice, seeking full commission, from the listing agency who had held an open house for the property my clients purchased.

 First, a little background. In the beginning, the clients had interviewed me for three hours, while I went over everything including the Purchase contract line by line, market conditions, pricing, negotiation, inspections, comps, etc. . Afterward, they selected me as there agent and agreed to sign an Exclusive Buyers Agent agreement. Keep in mind; these clients are of the type that needs to know and ask everything they can think of before making a decision, hence the three hour interview.  

 It may also be worthy to note that although the clients speak elementary English, it is the clients' third language. And, they also wanted me to be their agent since my wife, who is a loan officer, speaks their native language. My wife would always help with explanations of more complex terms and concepts in their native language. In the beginning we also discussed Open Houses (OH) and that I would prefer to join them during their visit. However, we mentioned that if they saw an OH while driving around, it would be okay to stop in, just don't sign in and always tell the agent at the OH that they already have an agent. They were also given a stack of my cards.

 The arbitration claim is: the clients had seen the property on a Saturday during an OH. Actually, their son saw the OH and called them to come see it. The claim explicitly states, "The clients told the attending OH agent that they are already working with an Agency, but the agent didn't know what that meant." After leaving, the clients then called the attending OH agent, he was not the listing agent, and asked if they could get in to the house again on Sunday morning. He agreed and showed the house to them again on Sunday morning. At that time, the clients reiterated to the agent that they already have an Agency.

 On Sunday afternoon, the clients called me and said they had seen a home they liked during an OH and they would like me to take them back to see it again on Wednesday and ask my opinion of the property.  I asked them if they had signed in and mentioned they already have an agent and they confirmed they did. At this point they didn't mention they had seen it twice but they were very excited about the home. I then showed them the house on Wednesday and went over everything possible with them, knowing their need for information and assurance about things such as the hot water heat, electrical, age and condition of the home, etc. Since the home was significantly older than the original requirements, I asked them to think it over and we can see the home again on Saturday. They agreed.

On Saturday, we again saw the home for over one and half hours and they wanted to make an offer. We sat in the kitchen of the property and wrote the contract. During our conversation, they told me that the OH agent keeps calling them every day since the OH and leaving them messages to call him back. While talking about this the clients mentioned they had seen the house with again last Sunday. I told them if he calls again, tell him to stop calling and that they do not want to work with him.

 That was the last the clients and I heard of the OH agent until four months later and the arbitration claim.

I responded to the arbitration claim with a three page synopsis describing my long term relationship, the numbers of properties presented, shown and the complete litany of events leading to the sale on my behalf, including the Exclusive Buyers Agreement and restating the attending OH agent had been told, twice, by the clients that they already had an agent. Although due to their language, they said "Agency."

 My response included many statements of Procuring Cause against their claim including:

 Illinois Realtor Association:

Procuring Cause Explanation: The procuring cause will be the agent who originated the chain of events, without abandonment (agent leaving client) or estrangement (client leaving agent), that leads to the successful sale. (Ref:http://www.illinoisrealtor.org/Member/legal/Hotline/procure.asp)

It is clear that the clients here were never abandoned by their designated agent, nor was there ever a case of estrangement by the buyers of their designated agent.

 

NAR Definition

PROCURING CAUSE: Procuring cause is the interplay of factors which demonstrate the unbroken efforts of a broker (through their agent) that are responsible for the buyer making a decision to consummate the sale.

 One month after my response, the claiming broker still wants to pursue the arbitration again stating that his agent did not understand what the client meant by "We already have an Agency."

He also is seeking the full commission stating that the clients would have never been introduced to the house if they did not have the OH. And, why did the clients call his agent to see the house the second time.

 My first point here is that the clients did not fully comprehend the difference in the OH and calling the attending agent back. They did however, completely understand that they did not want to have the OH agent represent them and in their words told him so. Therefore, they explicitly abandoned him in any effort to write and/ or negotiate on their behalf. The clients did understand dual agency and did not want to work with him at all in the purchase of the home. They still stand by this.

Secondly, the clients having told the attending OH agent that they already had an Agency twice, and yet that agent continued to pursue our buyer clients is a violation of the code of ethics. See below:

 Code of Ethics and Standards of Practice
of the NATIONAL ASSOCIATION OF REALTORS ®

 Standard of Practice 16-13

All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client's representative or broker, and not with the client, except with the consent of the client's representative or broker or except where such dealings are initiated by the client.

Before providing substantive services (such as writing a purchase offer or presenting a CMA) to prospects, REALTORS® shall ask prospects whether they are a party to any exclusive representation agreement. REALTORS® shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects' exclusive representatives or at the direction of prospects.

 

Help. Are there any other reasons I could have in defending my situation? Does anyone have any cases that may have precedence to this?

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Topic:
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Location:
Illinois
Tags:
open house
procuring cause
exclusive buyer agreement
contacting your client violation

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