Connect with us

Housing News

Procuring cause: I wrote the deal, I get paid… don’t I?

Published

on

I’m sure there are several variations on this theme depending on which State in this Union you practice your profession, but the cause and effect are almost always the same when it comes to determining who earned the commission on a real estate deal. This subject is always a great conversation starter amongst us real estate pundits but may be one of the more misunderstood issues in our industry. Let’s take a gander at a couple of instances and the basis for determining the root of who was the procuring agent or broker.

Estrangement and Abandonment

These two terms are the basis for shaping the outcome of who is due the commission. And, it’s not always as easy as saying, “I wrote the deal so I get the commission.” If there is any question who originally brought the buyer to the attention of the seller or vise versa, one must look at any break in the chain between when the buyer or seller where first introduced to each other and was there any reason they didn’t consummate a deal while in your charge. First let’s look at Estrangement. Was there anything you said or did…or didn’t say or do that caused either party to not close the deal? One case study had a buyer’s agent go after a commission when the folks she was working with bought a house she showed them using another agent. The case goes on to show the buyers had requested their first agent help them with finding a lender for a house they wanted to make an offer on. Despite the first agent’s efforts, the buyers were unable to obtain financing and the deal died. Subsequently, the buyers moved on and the first agent thought that was that. The buyer’s then made an offer on the same house with another agent and the deal eventually closed. It was determined the first agent was not due a commission because the first agent was unable to help their client obtain financing which amounted to estrangement of the parties.

A second case study focuses on abandonment and was more interesting because the first agent did everything right and was found to be the procuring cause of the buyers finding the house they eventually purchased. In this case, a fairly new agent was working with some buyers when she explained to them she was going to be out of town for a week on vacation but that here Broker was available and would be happy to assist them if they saw something while she was gone. On her return from vacation, she had learned her buyers had made an offer on a property she had shown them prior to her holiday. It turned out the buyers lender (who the buyers had a relationship before they met the first agent) had referred the buyers to a ‘colleague’ who eventually wrote up the deal. After closing, the first agent went after the commission and proved that there was no break in the chain and that she made every effort to make sure her buyers were in touch with her Broker while she was away. Because she was diligent and kept an impeccable paper trail of all here correspondences, it was determined there was no abandonment by proving through emails and phone records she did remain in contact with her buyers throughout the course of their relationship and she won her case and got her commission. (By the way, these case studies were determined before our MLS had Exclusive Buyer Agency Agreements in place)

How about on the Sellers Side of the Deal?

Here things are a bit more black and white (at least in the State of Washington) due to exclusivity of the agreement between the Listing Broker and the Seller. That said there are still instances where the first listing Broker will still be due a commission if the house sells even after the listing agreement expires. There is a provision in our listing agreements that states: Further, if Seller shall, within six months after the expiration of this Agreement, sell the Property to any person to whose attention it was brought through the signs, advertising or other action of Broker, or on information secured directly or indirectly from or through Broker, during the term of this Agreement, Seller will pay Broker the above commission. Sounds like if you take an expired listing in Washington, you better be certain you know whose been in the property, seen the for sale sign, read the newspaper or been on the internet looking at houses…or you may be up against a procuring cause issue when you sell the house!

So, I’d love to hear about how this subject works in the state where you work and live. Have you had an instance where procuring cause affected you? Any case studies you know of that you’d like to share?

Patrick Flynn is a 13 year Veteran of this Real Estate fray and a blogger on mySeattleblogs and is active in various social networks. Like many writers at Agent Genius, Patrick wears a few hats other than a Broker's lid- he is also a Certified Real Estate Instructor for the State of Washington and has enjoyed delivering 1,000+ hours of clock hour and non-clock hour approved courses in his career. Patrick has also been a Designated Broker since 2003 and revels in being able to coach and mentor fellow real estate professionals.

Continue Reading
Advertisement
18 Comments

18 Comments

  1. Cheryl C

    June 7, 2010 at 1:12 pm

    I have a rather curious one. I had listed the home of a client in my church who was relocating. To make ends meet, after about 4 months of the house being on the market, I started working at a nearby school as a teacher’s assistant. One of the teachers I worked with was looking for a house with another agent. Not wanting to create any undue tensions, I did not pressure her into working with me. However, I did discuss with her and other teachers I worked with the progress of the listing in addition to encouraging the teacher who was looking to consider it. An offer they made on another home fell through. Then, halfway through the school year, my clients decided to list with another agent who listed the home $10000 less than I had. At this time the teacher I worked with was very excited about putting in an offer on a house they saw. Within two days, my old listing went under contract. Through talking with the teacher, I discovered (and had to hide my mortification) that she offered and went under contract on the house I had listed. I pretty much retreated from Real Estate for a couple of months after that but am now wondering if I might have a case of “Procuring Cause” even if the buyer did not actually look at my listing when I was the agent but I had simply told her about it?

  2. Erica Ramus

    June 7, 2010 at 6:31 pm

    This is such a good (and complicated topic) to debate. Any agent reading this post probably can say “I had a case once when…”

    So, I had a case once where I was the listing agent. Buyer called in from the internet listing. I asked her if she was working with another agent–and she said no. When can I show her the house? I told her I was at the house right now, and she could come over if she didn’t have an agent. Again, NO.

    She liked the house, and had questions. We set up a 2nd showing for when her husband was available.

    I emailed her all her answers, and fielded several phone calls from her. We even discussed listing her current house. We made the 2nd appointment.

    Then another agent brings me an offer–from this woman! I called the seller and presented her offer, which he rejected.

    In the agent’s offer was a form letter to cobroke x% to her. I told her to produce a buyer’s agency and she sent me a signed consumer notice (not buyer’s agency) dated AFTER my first showing.

    Long story is seller rejected offer, so it was a moot point. But I then added a line in my MLS descriptions stating buyer’s agent would only be compensated if they attended the original showing, and not appeared AFTER the fact. My MLS had a problem with that, and the board made me remove it, stating I could not qualify my offer of compensation on the MLS.

    YES I would have been happy to have sold this house. But the fact remains I asked the question twice if she was working with someone, and twice got NO. I showed it to her, answered all her questions, and then her “agent” appeared. That is just not right.

  3. Patrick Flynn

    June 7, 2010 at 9:32 pm

    Great comments Ladies…sounds like you both have or had a good case for procuring cause there. I’d check with your Brokers to see what guidelines your State has for any recourse. Thanks for your stories.

  4. Ken Brand

    June 9, 2010 at 4:22 pm

    Nice post. To me, there are two worlds, the world of technicality, rules and regulations and the truth and reality world, how it really works.

    In the great state of Texas, in 20+ years and 1,000’s of transaction (I’m a sales manager, I didin’t personally transact 1,000’s) I’ve had my share of technical claims and conversations on this subject. In reality, I’ve never seen one actually go before the board or the judge.

    I understand the frustration when someone actually is the procuring cause, but if the client/consumer/citizin sez, I don’t want you to represent me, for what ever reason, that’s reality. Painful, unfair, maybe…. probably. But like I’ve said, I’ve never seen the procuring cause claim ever pan out.

    Personally, when someone tells me to fly a kite, I don’t like it and I don’t fly a kite, but I move on.

  5. Ken Montville

    June 10, 2010 at 7:56 am

    Procuring cause is always such fun to reminisce about and ponder.

    Here’s my take: suck it up and move on.

    It may just be me but I have yet to work for a Broker who was willing to “go to the mat” to fight for a commission. They tell me it’s overly time intensive and the outcome is anything but certain. The Broker “advice” is to go out, get more clients, close more sales and don’t worry about the rare transaction that gets stolen either because of the client or another agent.

    Procuring cause is like a door lock. They keep honest agents honest but do nothing to the agent who is going to write with your client regardless. I haven’t run across a Broker willing to go after a member of the public, either, even with a Listing Agreement or Buyer’s Broker Agreement.

    The whole procuring cause thing, IMHO, is a freakin’ joke.

    Ken Brand is right. In the “real world” procuring cause is just a nice thought exercise.

  6. Shannon Thain

    March 6, 2011 at 10:52 am

    I am dealing with a procuring cause issue on a vacant land project that is bank owned not listed. I have been working with this bank for over two years and have created a repoire and track record of being able to sell there projects without actually listing them. In the last 1 1/2 I have sold 4 projects and have 2 pending. Because of this relationship I was able to help the bank overcome there concerns of selling to my new builder. I would like to additionally point out that my builder had tried to meet with this bank on multiple occasions and had sent mutiple offers with other agents or in some cases directly themselved with no response… not even a counter.

    Within 24hrs of submitting our offer we were responded to via counter which then my buyer accepted. Shortly thereafter, It was brought to my attention that another agent was claiming that he was owed on this transaction due to showing the lots two months earlier and writing an offer for 4 of them. His offer was for $35K for a total of 4 lots with the same closing terms as the offer I wrote. The offer I wrote was for all 31 lots at $30K per lot. My understanding is that since there was no buyers agency agreements signed. My feeling is that the agent abandoned the client by not following through on the deal and staying in contact with the bank, making a re-offer or getting the deal signed on top of two months passing that the agent has not valid claim as to the procuring cause.

    I don’t however want to be onsided and would like the opinon of others on this situation.

    • KB

      July 22, 2011 at 8:24 pm

      I had a very similar situation. I was burned by a buyer. The buyer wrote a contract with me and the seller wouldn't agree to the terms. I even offered to lower my commission to make the deal go through, but the listing agent wouldn't. It was for a seasonal summer home for the buyer. The buyer told me he was going to stop looking. I tried to stay in contact with him, but he never responded to me. The next summer, he wrote another offer on the same home with the same listing agent, and closed on it. Due to my contract negotiations, he knew the seller would at least come in $25K under.
      Am I entitled to a commission under procuring cause?

Leave a Reply

Your email address will not be published. Required fields are marked *

Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

Published

on

Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

Continue Reading

Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

Published

on

aging housing inventory

aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

Continue Reading

Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

Published

on

zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

Continue Reading
Advertisement

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!