Procuring cause is a poorly defined and poorly understood concept that in a real estate transaction can determine which agent who may have interacted with a home buyer is entitled to the buyer’s agent share of the commission. Procuring cause is defined by the National Association Of Realtors as
“the uninterrupted series of casual events which results in the successful transaction.”
and all Realtors agree that any disputes regarding which agent is entitled to a commission be arbitrated. Why this matters to consumers is that it may limit their rights when it comes to choosing which agent they want to work with when buying a property. Showing a property to a prospective buyer is usually the first step for an agent to establish that they are the procuring cause of the sale.
One typical procuring cause scenario develops when consumers find a property they are interested in seeing and contact the listing agent directly to see the property. Thinking they can still hire their own buyer’s agent if they like the property, they make an appointment and tour the property with the listing agent. Later, when the potential buyer decides they would prefer to work with an agent who represents them instead of the seller, they come to find out that, while they have every right to hire their own agent, they may have to pay their agent out of their pocket rather than have their agent collect the buyer’s agent fee that the seller has offered to pay and is built into the asking price of the property. Sometimes the listing agent may be willing to waive their claims to procuring cause if they are going to receive a large listing commission if the sale closes, but not always. And not all listing agents receive large listing commissions. Some agents offer discounted listing commissions or flat fees paid up front and their motivation in showing the property is to earn the buyer’s side of the commission as well.
Another typical procuring cause scenario develops when a consumer contacts the agent they see profiled next to a listing on a site like Zillow. In this case, the consumer may even think they are contacting the listing agent, but usually they are contacting an agent totally unrelated to the property who bought placement next to that listing. The agent may not know anything about the listing and may know little about real estate in general. If the consumer lets that agent show them the property, that agent isn’t likely to be willing to give up a procuring cause claim since they stand to make nothing for their efforts if they do.
Procuring cause, like many things, started out with good intentions. It kept agents from working with prospects for extended periods of time to help a buyer find the right property, only to have the buyer get their neighbor who got licensed last week write up the deal and claim the commission. It had it roots in a time when there were no buyer’s agents, all agents worked for the seller. It is not well understood, even by very experienced agents, but almost every agent believes (incorrectly) that if they show a property, that automatically gives them the right to claim procuring cause.
Real estate business models are rapidly changing and consumers have more options in services and fees than ever before, but procuring cause can throw a monkey wrench into a buyer’s choices of who helps them and how they get paid. Buyer often just want to see a property they like as soon as they can, and don’t realize until it is too late the implications in doing that. If you are planning on buying a property, you should go ahead and find a good buyer’s agent before you start looking at properties and work with that agent through out the process. Goddin Real Estate offer superior service and knowledge and innovative programs that can help you save thousands of dollars in fees. To find out more about our services and how procuring cause can limit your choices if you are not careful, contact John Goddin at 919-968-2100 or John@GoddinRealEstate.com .