Thursday, February 14, 2008

Procurring Cause

Realtors who Cut commissions, Freeze out buyers agent (edit/delete)
I read lots of posts here about "I should've had a buyer agency", or "I got cut out of a commission". BIG misconceptions here. I won't address Buyer Agency duties here. Very few people have a problem with the duties, it's the paycheck that seems to be so confusing.
According to "About.com" , "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."
This seems so clear, yet it becomes a real nightmare for many. I'm going to suggest that everyone who turns their head the other way, lets a broker get away with cutting commissions, is as guilty as the offending broker.
NAR has gone to great lengths to define and test Procuring Cause. According to http://www.realtor.org/LetterLw.nsf/pages/95procuringcausefactors?OpenDocument, we must look at many factors:
Procuring cause factors may be grouped, for organizational purposes, into nine different categories. These categories are:
The nature and status of the transaction
The nature, status and terms of the listing agreement or offer to compensate
The roles and relationships of the parties
The initial contact with the purchaser
The conduct of the broker* or agent
Continuity and breaks in continuity
The conduct of the buyer
The conduct of the seller
Other information
This tells us there really isn't a black and white answer. The Code of Ethics and Standards of Practice becomes a guide at hearings. They guide us to test the Code with evidence provided to support the case. Standards of Practice tells us what should happen, and provide test cases to compare our hearing to.
Realtors who "cut" their commission MUST disclose that in the MLS. Variable commissions are allowed, but must be disclosed as such. When you show property that is marked Variable, you are forewarned that a Seller may choose to accept a contract with a lower price, knowing they will pay a lower commission (this happens in new construction a lot). I suggest disclosing this to a buyer, and telling the listing agent you've disclosed this information. If this will help protect all parties to act legally.
No matter who the buyer's agent is, they have signed on to accept the offered commission. Giving any back to the buyer is very illegal. Be up front with all parties, for the good of all parties. Bring charges against Brokers who try and circumvent the system. Stop complaining about those who break the rules, if you won't bring them to justice.

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