The real estate agent whose actions result in a buyer’s purchase of a home is considered the procuring cause and is entitled to receive a commission. State REALTORⓇ associations have different guidelines on how procuring cause is established and the rules aren’t clear-cut. Things can get complicated if you don’t understand how the home-buying process works and if you don’t let everyone know that you are working with an agent.
How Disputes Can Arise
Procuring cause disputes can occur if a client works with multiple real estate agents. For example, if an agent shows you a house, then you fire that agent and hire another, and then you decide to buy a house shown to you by the first agent, that agent will be the procuring cause and will get the commission. The second real estate agent might also be entitled to a commission payment from you for closing the deal, depending on the specifics of your agreement.
If a seller’s agent shows you a house without your agent present, the seller’s agent will be the procuring cause. If the seller’s agent helps you purchase a house knowing that you are under contract with another agent, your contracted agent can dispute the closing agent’s commission.
How to Prevent Disputes
A buyer’s broker agreement says that a specific agent is representing you and that you will be responsible for paying that agent a commission, even though the funds will technically come from the seller. An Exclusive Right to Represent Agreement stipulates that a buyer cannot be represented by another agent during the term of the contract. A Nonexclusive/Not for Compensation agreement allows a buyer to work with multiple agents. An agency disclosure agreement explains the capacities under which an agent can operate. Those agreements can help you avoid procuring cause disputes.
Inform every real estate agent you communicate with that you are represented by an agent and provide that agent’s name and contact information. If you meet an agent at an open house and the agent doesn’t ask if you have representation, raise the issue yourself at the first opportunity to prevent any misunderstanding. If you sign a guestbook, write your agent’s name alongside yours.
If you find a property online or elsewhere and you want to view it, don’t schedule a viewing through the listing agent. Have your agent show you the house so he or she will receive a commission if you buy it. If you have questions about a property, ask your buyer’s agent to contact the listing agent.
Don’t Get Embroiled in a Dispute
Buying a house is complicated and many people aren’t familiar with the intricacies of the real estate profession and state laws and rules. Procuring cause disputes can make things messy, which is why it’s important to know how to avoid them. If you hire an agent, let that person work on your behalf and make sure any other agent you speak to knows who is representing you.
