Procuring Cause of a Sale in Real Estate

In a falling market, price is the key.
The Different Viewpoints of Buyers and Sellers. (c) Photo: sxc.hu

Definition: The legal definition of procuring cause would be "the cause that results in the attainment of a stated goal". In real estate it would take on the meaning of the real estate agent or broker who, by their actions in producing a buyer, brought about the sale of a property.

Avoiding Procuring Cause Disputes when Working with Buyers

It is unfortunate that our business is structured such that we can become embroiled in commission disputes, usually caused by our customers' lack of understanding of how things work coupled with our own lack of care.

Basically, if you get a new young buyer couple, they could have been out with other agents, maybe many.  They may enjoy looking at houses, and they could have looked at many of them across those agents.  They often won't remember one they've seen before.  You're one in a string of agents they've used, mainly because they don't see a problem with it.  

You just happen to be the lucky one who shows them the home they happen to fall in love with.  The only problem is that they've seen it before with another agent.  They had forgotten about it because they've seen so many.  You write it up and you mark it under contract in the MLS.  When the agent who showed it to them a few weeks ago sees it as "pending," they drag out their notes and call your customer couple thinking they would rekindle the relationship.  When they tell them the home they liked went under contract, they get the news.  

Now, they didn't do that much really, just showed then a couple of dozen homes and try to convince them to pull the trigger on the one they liked.

 They just couldn't quite get them there.  You, on the other hand, showed them a couple of dozen homes, and they were ready this time.  So, who did more?  Neither of you did much if any more than the other, but you're the lucky one!  Then you get a call from the local MLS saying that there is a complaint and procuring clause claim from that other agent.

Will they end up getting some or all of your commission?  Doubtful, but not out of the question.  You'll probably be OK unless your customers say something about how the other agent had them almost convinced but they forgot their phone number.  You just don't know.

Do you really want a royal nightmare?  Same deal, and it turns out that the couple first saw the home when it was an open house set up and manned by the listing agent.  Now, you know that they're very aware of the contract, as you submitted it to them.  It turns out that they remembered the couple and personally showing them through the home and working hard on them to buy it.  And, they have their names and signatures on the visitor sheet.  They file a procuring cause claim as well!

Will you be OK?  Probably, but you never know.  You'll certainly go through a lot of hassles and earn your commission twice.  I admit that this isn't a normal situation, not even a common one.  But, I once had a listing agent file a procuring cause claim on my buyer deal for their listing simply because they had sent the buyers some information by email weeks ago.  They had a short email conversation, and it was over.  I didn't have a problem, but a hassle once again.

The thing about these is that usually there isn't any merit to these claims.  It's a shame that some agents feel the need to go after money they don't deserve, but they do it.  Always ask buyers about their past home search activities, if they've worked with other agents, and particularly if they've ever been shown that "home of their dreams" by someone else.