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Procuring Cause

DEFINITION

Procuring cause refers to the real estate agent that ‘causes’ a prospective buyer to buy real estate through a set of actions.

EXPLANATION

Commission disputes can be common among real estate agents, considering that it’s rare that a property will have a broker with exclusive right to sell. This means that agents are in constant competition with each other as to who is entitled to sell what property, as well as who is entitled to what commission. Since there are also arrangements in which some agents choose to work in partnership and commissions are split, this can make sorting out commission percentages complex. This is when procuring cause would apply. The agent that is the procuring cause is the agent that causes the buyer to actually go through with the purchase of a piece of real estate. This might mean that it won’t be the agent that first obtains the listing or even presents an offer and negotiates on behalf of the seller or alternately presents an offer to a seller. A

Process

Real estate associates set guide lines for establishing procuring cause, but none of those guidelines are set in stone. Each state will have different guidelines for real estate sales. For instance, a potential buyer might choose to sign a broker’s agreement with a real estate agent and then start working with another, who closes the transaction. A buying broker’s agreement is a contract that will specifically outline the duties of both the buyer and the broker.  In this instance, the agent that closes the sale could be the one to earn the commission.

Agents will occasionally file complaints against each other for these types of reasons.

Because buyers often aren’t aware of procuring cause, but there are ways to help establish it for brokers.

–              It is necessary to mention when working with other agents. Brokers are supposed to ask this question but may become distracted, in which case it is necessary to remind them.

–              Signing a buyer’s broker agreement, so that the relationship, expectation for compensation and duties for both the buyer and agent are clearly outlined.

–              Working with a single broker at a time will help prevent conflict.

–              The buyer should not make direct calls to other agents for information that the current agent may have or can find.

–              Signing an agency disclosure agreement. Agency disclosure agreements go over the capacities in which an agent can act. Every capacity will be described until a specific property is located, at which time the capacities will change depending on the property for sale.

–              If attending an open house, the buyer should bring their agent’s card and sign their name next to their own in guest books. This will prevent other agents from attempting to gain that buyer’s business.

In some states, a broker might be entitled to a commission if that broker is responsible for bringing the seller and buyer together and created a sale through negotiations executed by him or her, unless the buyer and seller consciously choose to exclude the broker. For a broker to be entitled to commission, that person must specifically bring together the buyer and seller, not associates of either. The broker has to be involved in the negotiations or procuring activity. A broker cannot expect to earn a commission on simply passing along information about a property to prospective buyer, although exact laws depend on the state in which the sale takes place.

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