Daily Archives: April 27, 2009

Ensure Your Next Commission is Secure

“I question the validity of a practice that allows you to be paid when you didn’t do the job you’re getting paid for.” – Brenda Florida, Century 21 Alliance of Lansdale, PA

“Procuring Cause should simply go away. It’s an antiquated system.” – Tom Early, President of National Association of Exclusive Buyer Agents

Procuring cause. It pains me just to type the phrase; like the words “Root Canal” or “Pepto-Bismol”, ‘procuring cause’ packs around negative connotations like they’re a new-born litter of possums. What most agents don’t know is that while procuring cause may be a danger, it is in fact a two-way street that has the capability to benefit both listing and selling agents.

Verily, hast thine gotten ahead of thineself? Thou hast! Forgive me; for all you readers out there that are still in the dark as to what procuring cause actually means, let me explain. Procuring cause disagreements arise when a prospective homebuyer expresses interest in a property and is, in some way, introduced to the property by a licensed real estate agent. The introduction could take place at a showing, open house, or in the agent’s office over a cup of coffee and a stack of photos. After this meeting, the buyer drops off the face of the earth, only to re-appear a few months and a few different showings later with another agent. The buyer, along with Agent #2, then expresses interest in the house introduced by the first agent, and suddenly #2’s commission is in danger. Disagreements arise because Agent #1 feels like it is his client since he struck up the relationship and showed the buyer the house he wants. Agent #2 thinks it is his sale because he has taken the buyer to several other houses and was unaware of Agent #1. Who gets the commission?

As you can see, procuring cause cases get pretty nasty, pretty quick. The beauty of procuring cause is that the outcome, most often decided by a mediator or arbitration panel, is entirely situation-specific, or ‘property-specific’. Panels will award procuring cause to he who has the following legitimate claim: the ability to define that you, as the REALTOR, started the unbroken chain of events that resulted in a transaction. ‘Breaking’ the chain of events is often defined as either ‘abandonment’ or ‘estrangement’.

NAR’s Arbitration Manual proffers the following definitions of ‘abandonment’ and ‘estrangement’: ·

  • Abandonment – when the broker’s inactivity, or perceived inactivity, may have caused the purchaser to reasonably conclude that the broker had lost interest or disengaged from the transaction. ·
  • Estrangement – the broker engaged in conduct which caused the purchaser to terminate the relationship, either via words or actions.

In other words, when you put off calling a client because you’re busy playing Bejeweled, you have no case upon which you can claim procuring cause. Also, if you perhaps decide to replace a stripe of your client’s cherry-red painted Porsche with the champagne color of your Yukon on the way out of the office lot and then subsequently blame it on your shotgun-riding client, you have no case upon which you can claim procuring cause. Sad, I know, but painfully true.

We already know what Mrs. Florida and Mr. Early have to say on the subject; but what about you? Have you ever estranged a buyer and squandered a sale? Or have you taken pains to place all your ducks in a row, which in turn has awarded you with procuring cause and a cut of a nearly-lost commission? What steps have you taken in the past to avoid procuring cause disputes?