The Procuring Cause

            In today’s cooling housing market, real estate agents and buyer’s brokers are basically clamoring over one another to secure sales. 

            This typically cut-throat business seems to be more intense than ever, as the lack of buyers out there are causing agents to swarm.

            This is causing an increase in the instances of multiple agents helping one buyer, causing disagreements in which agent is entitled to the commission. 

            This is known in the industry as the “procuring cause,” and many fights are stemming over it, because multiple agents believe they deserve the commission.

            The procuring cause agent is essentially the agent who secured the sale and caused it all to take place.

            A September 27, 2006 article by Elizabeth Weintraub of about.com, “Real estate agents wars over procuring cause,” discusses some things that buyers should do to avoid any unnecessary arguments.

            “You don't have to hop from agent to agent to end up causing commission disputes among real estate agents. In case you're thinking, ‘What difference does it make since the seller pays the commission,’ be aware that today's buyers typically sign buyer's broker agreements, making the buyer responsible for payment of the commission, even though that fee is paid from the seller's proceeds.”

            “Commission disputes boil down to what is referred to in the industry as ‘procuring cause.’ The agent who ultimately caused the buyer to purchase the home and earned the commission is the procuring cause agent. That procuring cause agent might not be the agent who obtained the offer from the buyer, presented the offer and successfully negotiated the seller's acceptance of that offer.”

            The thing that makes the procuring cause difficult to deal with is the fact that there are no set rules to determine who exactly the procuring cause agent is, although there are some rules to govern the situation.

            “Some facts carry more weight than other facts. A buyer could sign an exclusive buyer's broker agreement with one agent but the second agent who closes the transaction, depending on circumstances, could end up earning the commission. Procuring cause is complicated and the outcome is not always predictable.”

            The best bet to avoiding one of these disputes is to be up front with your agent and any other agents that approach you and tell them that you are already working with someone.

            Then you should sign the necessary documents to get everything in writing, including his or her duties and pay.

            Sign a buyer's broker agreement with your agent. Buyer's broker agreements will clearly describe the relationships, compensation and duties. Sign an agency disclosure with your agent. Agency disclosures describe the various capacities under which an agent can operate. Since the agent doesn't know the specific capacity until a property is located, all capacities are described to you.”

            Following these tips should ensure a painless real estate transaction.

 

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