Hello All -

I just closed yesterday on a deal that was quite the nightmare. I got a lead on my website three months ago from a couple from out of town that was looking to move to my area as the result of a job transfer. At that point I began sending them homes that matched their criteria over the next few months.

Well, they then finally scheduled some time around the first of June to come up and look at homes with me. They had only planned to be in town for 1 day and look at as many homes as possible and have one to make an offer on by the end of day. Well, after looking at close to 15 homes in one day, they then switched gears and decided they wanted to look at new construction. So, they decided they would be back next weekend and we would resume our search only looking at new construction homes.

Before I continue, I did learn a very valuable lesson here. ALWAYS GET A BUYER’S REP. Since they seemed content on making a quick offer, and they were a little skittish on signing any permanent agreements on first visit, I decided to go ahead and show them the homes without getting the buyers rep.

Anyway, the next weekend rolled around and they called me and informed me they had 4 new homes they wanted to look at. We looked at the four homes, and they decided that they did want to make an offer on one of them. So, I wrote up the offer, negotiated the offer with the listing agent for two days, and then finally got acceptance. Everything was going just great right??? LOL WRONG!!

Two days later I got a phone call from an agent, lets call them (Agent X). I answered “Hello” and before I even knew what the call was bout I was getting attitude for stealing a client and writing an offer on a home that Agent X had shown. Agent X was upset and demanded that I share the commission with them because they claimed they were the procuring case of sale. Well, as you can imagine, I was totally shocked and just informed Agent X that I would need to get in contact with the buyers and figure out what was going on.

I then call my buyers and apparently the wife had hung around in town after our initial viewing of 15 homes. She had wanted to stay a day or two longer and get familiar with the area. Well, while driving around, she saw three homes that she wanted to see right away. They were right next to each other and new construction. She said that she knew I had in-laws in from out of state and did not want to bother me for just an hour or so called a guy that was in that immediate area and that 3 other people from her husbands company had used with their relocation. Whatever the case, she viewed three homes with Agent X. Agent X did not ask if they were using another agent, got nothing signed by them, and did not give go over the Information about Brokerage services form either. Basically just showed up, and let them in the home, and left. Then a day or so later the buyers proceeded to call me the next day and set up appointments to view those three homes again with her husband now in town.

Either way, both of use were deceived by the buyers. My question is sort of how agent X handled the situation. Agent X was very hostile towards me and very demanding, telling me how busy that they were, and they did not have time to be showing people homes and not get paid for it. Basically trying to “Big time” the new agent. I am not this type of person and hope I never get to a point where I handle myself this way. Honestly had this person called me and inquired what went on, and really just talked through things with me to get to the bottom of things I would have probably gladly split my commission with them 50/50. However, with their attitude and bigtiming I really did not want to give them anything. After speaking with my broker they said that it was up to me whether I wanted to concede to a 20% referral fee that they were asking for and that they would support me either way. However after doing some legwork it appeared this other Agent X had passed the bar exam as well, which explained the jargon they tried spouting off to me on the phone. Anyway, my brokerage felt that this person may be such a jerk that they seemed like someone who might really try to take things legally in the end, so my brokerage suggested I just give the 20% referral fee and get on with things.

I know this is along story, but I just really wanted to get some feedback from all you professionals. Is that how you would have handled things??? Would you have demanded a commission split from the other agent if you had only spent 1 hour with this person that was already working with another realtor that had been for months? My stance is this, I always want to do what is best for my clients, and if they feel it is in their best interest to go with another realtor after viewing a home with me then that is their prerogative. I am not going to chase realtors around trying to get commissions from these customers. Anyway, I just felt that it was really sorry and busch league, but wanted to see what the board thought because maybe I am off base here in thinking like that?

Funny thing is this though in the end I am going to come out in good shape because while many of the transferees had used this agent, he will probably lose that referral business within that company because the buyers I worked with were so put off with this person, and how he tried to strong-arm everyone that they have sent out a communication to the husbands job informing anyone that is on the verge of transferring to the area to stay away from this person. Flip side is that I have already been contacted by two people that are transferring up with his company. So hopefully those referrals will now come to me!! 

Thanks for letting me share my story and I welcome your thoughts, and if I need checked, let me know!

He may very well get all of the commission if this goes to arbitration. I would gladly pay the 20%, whether he was a jerk or not. Typically , the procuring cause, the one who laid the foundation for the rest of the transaction, wins the case...all of it. this is a real bummer I know, but it is my thoughts that 20% would be better than losing all of the money.
I may be wrong, but it sounds to me as if he were the procuring cause as he showed the property first.

I've been in this situation before, however I was "Agent X" as in the procurring cause. The buyer went with someone else after I showed the house and devised very detailed market data on the homes in the area and a strategy for negotiating an offer since he was completely adament about his incredibly lowball offer. I took the matter to my broker and was actually discouraged from taking it to the RE Commission and was told it would permanently damage my reputation and future business in the RE community.

What I'm getting at is that Agent X might have come across very strong because they knew it would be an uphill battle for them if they pursued legal action against you. So they might have felt the need to overcompensate by intimidating you initially to gain control of the situation before it went to the higher powers.

It's hard to suggest that you cut your loss and give the 20% considering how he/she approached you. What's even more upsetting is to know that this certainly won't be the last person to think it's perfectly acceptable to talk down to you this way.

Not trying to sound biased since I've been the other agent but it might be best to break bread on this one, but I'd definately let the other agent know how unprofessional they were about the matter. I'd also let them know if they could learn how to carry themselves like professionals they might keep clients and not have to resort to extremes in order to get paid. Most importantly, never get too involved with a client without a pre approval or agency agreement.

Well a few things to think about....

We have a saying in this business BUYERS are LIARS!

Never ever leave your commission or the way you run your business in the hands of a buyer.

Some on here will say not to use an eba,I strongly DISAGREE and i do not leave my business up for chance.Most buyers do not understand an eba agreement and they think it locks them in to paying you a commission even if you give crappy service or they don't like you.

What an EBA does is spell out who is representing the buyer and negotiating on there behalf,signing the agreement protects the buyers at least it's this way in ga.

You need to remember this in the re business"you always get alot more with honey than with vinegar"

In reality both of you screwed up this transaction by not getting an eba signed.The buyer was using the other agent as a pawn and that is not right.

Some buyers you will get future refferals from but most of the time the value is in forging long lasting relationships with your fellow peers that you will see for years to come.
Remember we all play in the same sandbox.

Getting the eba signed is easy have a 1 week intro period to see if you guys click and then at that time sign a longer agreement.

Buyers just don't want to be locked into a long term eba if they don't know they like working with you yet or not,the trial period solves this problem.

good luck

I Think a 20 percent refferal is not out of line.

I do two week Buyer Broker agreements. I have never met a buyer who hesitated on that. That said, if you waived it in from of the board during an arbitration hearing, they would not care less and still award the money to whomever was the procuring cause...all the money. BUT, by having your buyer sign that, they(the buyer) would feel the commitment and they would not even call this other Yahoo. I tell my buyers that by giving me a two week commitment, I will work harder to find them a home. If they will not commit for two weeks, how hard to you want to work for them. As mentioned, all of my buyers sign a two week deal. then we do another for two weeks.

Who wrote the offer?
The other agent evidently did not give a very good impression - if they would have, they would have written the offer. Just because they showed the property does NOT make them the procuring cause.
You answered your own question. I would NOT pay the other agent a single dime - It was not earned. :rolleyes:

We just covered this in a Code of Ethics class last week. Whomever showed that proerty, developed the interest and layed the foundation for that sale is the procuring cause. the person who wrote the offer did none of that.

In my opinion, this is the procuring cause -

I was agent x at on time, and I took 75% of the commissions without having to go to arbitration.

Read the OP, he did show the home when the husband came back. The wife took a look earlier in the week. As for "procuring cause" and how it's defined, it varies from state to state just as other real estate customs do. Agent "X" should have said something before the contract was accepted, IMO he should act like a big boy and eat it. Showing new construction is part of representing the sellers also.

I may be wrong...From the NAR manual...
"The Realtor responsible for first introducing the buyer to the subject property would be the procuring cause."
Exceptions:
1.Efforts and info provided by the first Realtor(Agent X in this case) were insufficient in assisting the buyer to reach a decision.
2.The first Realtor abandoned the buyer.
3.the first Realtor estranged the buyer.
4.the second Realtor removed an impediment which was preventing the buyer from purchasing property.

So, the Dude that showed the proerty is normally the procuring cause, but said dude may have fallen into the exceptions. They do not do "Dude Speak" in the Code of Ethics, but this stuff is in there.

The problem with the NAR COE, and don't let anyone tell you different, is that the COE is voluntary and is not law. Your state commission/board follows and interprets your state laws, not the NAR COE. If this were to go in front of the commission or a judge case law from that jurisdiction would rule not NARs COE.

With that in mind maybe a grievance is filed with the local REALTOR association. Look at #1 and remember that Agent X showed the home to the wife, the OP later showed the home to both the husband and wife then wrote a contract. Also consider the part of COE which says to put your clients interests first and your compensation last. Agent X may have a gripe but whatever happened to serving your customer? Is showing a home not part of his duty? And it's not like Agent X is totally out of the loop. This isn't a case of the buyers brother in law sending a contract over and has never seen the home or showed the buyers any other properties.

Yeah, I mentioned the exceptions and it seems he falls under those. Not certain about law vs. COE and COE being voluntary. As a Realtor, what happens if I say they are voluntary and choose to not follow them? I get fined and possibley lose my license. So, while it may not be law I do not know how voluntary they are.

Were you forced to join the NAR? No, joining is voluntary and not necessary to be licensed to sell real estate. Violating NARs COE will not in and of itself result in enforcement action by any state real estate board. Now the action may run contrary to state licensing law and that's what may cost you your license, not that you violated the COE.

The NAR does not issue licenses, you are a member/affiliate of a privately held/run association. You do not have to join to sell real estate and not all REALTOR members are licensed to sell real estate.

Your state issues/regulates real estate licenses and does not enforce NARs COE.

SMGardner, I like the idea of the two week EBA. I often do a one day EBA, but two weeks is not a huge commitment either, so from now that's what I'll recommend to buyers. Thanks.

A few years back I served on the hearing committee. There is far more to procuring cause than just letting someone look at the house. There is a whole chain of events. The agent that showed the home did nothing after showing the home. They did not call and followup after the showing. Neither had an EBA and the poster spent an entire day with the client and had a followup appointment set. The buyer wife just happened to stay in town and was inenifying new construction homes with the intent to have the poster show the homes.

This one is a slam dunk loser if the other agent goes to arbitration and that is why the angry phone call to scare the newer agent into paying a referral fee. Hell since they were so nasty about it I would say sure here is your 5% referral fee.

TargetRE,
Here is a newsflash for you. As a REALTOR you agree to abide by Arbitration! NO Judge, No Case Law..........just the COE

Yes, I know. If you see my follow up, I noted that there are four exceptions and AGent X seems to have fallen into a couple of those...

Paul did you read any of the post? I'm amazed at the REALTORs who don't know the difference between what the NAR (again membership is VOLUNTARY, if you think differently call the DOJ they'll be very interested) can do and what your state real estate board is mandated by law to do. When I took the NAR COE course the instructor pounded in the point that NAR was not a state/federal agency, not law, you voluntarily joined and agreed to its rules, and joining the NAR was not mandatory to sell real estate. The NAR is trying to stay out of the DOJs cross hairs. Nothing in the COE can/does supercede local law. It can't.

Sure you agree to arbitration as a paid member of the NAR. If you tell them to go pound sand the only thing they can do is revoke your membership. On the other hand your state board can take your license to sell real estate away, fine you and enforce the fine, and possibly have you criminally charged. You can appeal through a court of competent jurisdiction and FWIW neither will get involved in a NAR COE dispute.

Well since the post concerned procuring cause in compensation the state real estate board/commission is not even an issue so what was your point? This is over the co-op fee offered via MLS.

So tell us all how in your mind the state has any say in a compensation issue. If you are that confused in what the state does and what the local board handles them perhaps you should consider a refresher course.

WEll...the conversation was getting a bit confusing to me. I had no idea what the state law would have to do with a compensation issue between agents. We were talking procuring cause, who gets paid, who doesn't...the court does not get involved in much of that...I don' think. I am relatively new to this, taking GRI courses. Not a biggee there, but it sure sounds like it gets handled in arbitration if nothing gets ironed out. I have never heard of a case like this going to the courts...

Paul Oaks, you are one nasty little dude. There you go again with your personal attacks. You turn every meaningful thread into a gutter brawl.
Maybe you are the one who needs a refresher course on "How To Win Friends And Influence People"

Was the piece where he suggested a refresher course a personal attack? a gutter brawl? I do not know if any body needs a refresher course or not, but I do not see anything close to a personal attack here. I have told Paul to relax not too long ago, but I have never seen anything that resembles a personal attack. MD-- You do not suppose that you may be exaggerating maybe just a little bit, do you?
I tell you what, this place is real tame compared to some other forums I belong to.

Paul like most threads this one touched on more than one topic.

From the OP;
Later in the thread;
And here’s what I posted about procuring cause;
Then the thread, like most, took a turn when this came up;
So a few posts about voluntary, fines, and who can take your license.
And then your post. I’m not going to waste any more time responding to you considering I stated more than once the state and or court will not get involved in a COE dispute. It’s all there for anyone to read. That and I’m still waiting for you to explain how BPOs for lenders are USPAP compliant, and they’re supposed to be according to the COE.
Developing a reputation? What does the COE say about that?

MDHomes2Go,
As you are well aware your opinion is of little or no value to me so your comment means nothing.

Please tell us all exactly where the personal attack was.......OH Ya there it is.....It is YOU saying I am "One Nasty Little Dude".

The post was on procuring cause! TargetRE decided to take the thread in a different direction so I pointed this out! If you are unhappy with that well all I can say is Get Over It!

Now it you have something to contribute to the topic then by all means I am sure everyone would love to hear it. If not and you want to make personal comments please feel free to use the private message function.


TargetRe,

You previously stated in the earlier post.
Sure you agree to arbitration as a paid member of the NAR. If you tell them to go pound sand the only thing they can do is revoke your membership.

On the other hand your state board can take your license to sell real estate away, fine you and enforce the fine, and possibly have you criminally charged. You can appeal through a court of competent jurisdiction and FWIW neither will get involved in a NAR COE dispute"

So tell us all how the state board can fine you or revoke your license or criminally charge you on a PROCURING CAUSE disagreement between 2 Realtors???? Procuring Cause has nothing to to with state law or real estate regulations!

The fact that AgentX is a attorney only means he was attempting to bully the poster with the fear of legal action. AgentX is also a REALTOR who by membership agreed to abide by arbitration. Him being an attorney is of not advantage to him in an arbitration hearing before the board. He was Bluffing!

Paul Oaks, again the thread touched on different points. A previous post mentioned he may lose his license and I tried to explain that the NAR can't revoke his RE license, and the difference between the NAR, state boards, etc. then stated state boards/courts will not get involved in a COE dispute. And FTR what you quoted was a direct response to you and not about procuring cause. Not only did you break up my quote to change its meaning you also quoted me out of context, that makes you one nasty little dude.

NAR COE or not, if someone wants to sue they can. Whether or not a court recognizes broker co-op as a contract depends on local contract law and customs not the COE. If they're both REALTORS one or both can request arbitration. If one of them tells the local association to go pound sand, other than taking away their "R" lapel pin, what can the NAR do?

I recently read (I wish I could find the link)that a court used the Realtor Code of Ethics as a basis of law, of how Realtors are supposed to conduct their business. Which to me implies, you better follow the COE, or a court of law can use it to convict you if you don't follow it.

The can suspend them and they would not get the commission payment.
Others made comments about losing licenses and such but they were also incorrect just as you are in this case. You just continued to feed that misconception.

You agree to abide by the COE and to arbitration. If they do not want to do either then they can be kicked out and in most cases lose their MLS access and if their Broker is NAR they need to find a new office.

Many states have modeled their real estate laws and regulations after the COE.