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#412484 - 09/10/12 08:20 PM Procurring Cause
broker Offline
Major Contributor

Registered: 08/16/04
Posts: 2066
Loc: Cary, NC
Buyer sees a sign on a house and calls. Agent arranges showing and house is shown. Buyer says thank you and then decides they want to submit offer - but use a local buyer agent who will represent their interests and says they will rebate 35% of their commission back to the buyer. Agent is licensed, but not a Realtor or member of the MLS. Offer is submitted and showing agent is angry they didn't go to them.

Would your agency pay that buyer agent the commission or tell them they are not going to get it because of procurring cause?


Edited by broker (09/10/12 08:40 PM)
Edit Reason: sp
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the real estate industry is changing...

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#412486 - 09/10/12 08:45 PM Re: Procuring Cause [Re: broker]
CALIF DREAMING Offline
Veteran Member

Registered: 08/01/06
Posts: 1304
Loc: Downey, California
Did the initial showing agent ask the prospective buyers before showing the property whether or not they are already working with an agent and/or have a signed buyer/broker agreement?

You promised to pay a cooperating broker in the MLS, so yes, you must pay, unless the selling agent is not a board member. Contact your local board and get advice on how to initiate an arbitration hearing. If the judgement goes against you, then you will have to bear the cost of arbitration.
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#412488 - 09/10/12 08:57 PM Re: Procuring Cause [Re: CALIF DREAMING]
broker Offline
Major Contributor

Registered: 08/16/04
Posts: 2066
Loc: Cary, NC
They asked and the buyers said they did not have an agent. Nothing was signed at showing.

The buyers agent is not a member of the MLS or Realtor board - but is licensed to practice real estate.
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the real estate industry is changing...

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#412492 - 09/10/12 09:19 PM Re: Procuring Cause [Re: broker]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: broker
They asked and the buyers said they did not have an agent. Nothing was signed at showing.

The buyers agent is not a member of the MLS or Realtor board - but is licensed to practice real estate.




With the above clarification, this issue goes a little beyond procuring cause. IF you want it to.

"Representation doesn't mean compensation" or something similar I've heard.

Listing agent has no obligation to pay a commission (at least in my MLS) to a non-board member. Here, there are some agents who will tell that to a non-board member who wants to write a contract. There are some agents here who let that be a surprise.

There are some REALTOR members (and all members of my MLS must also belong to NAR) that will not cobroke with a non-NAR salesperson because... non-NAR salespersons are not bound by NAR COE.

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#412493 - 09/10/12 09:34 PM Re: Procuring Cause [Re: DueDiligence]
broker Offline
Major Contributor

Registered: 08/16/04
Posts: 2066
Loc: Cary, NC
When the seller signed the listing agreement, they were told that part of the commission would go to a buyers agent if one brought an offer. There is no discussion whether or not it is for an agent that is a "Realtor" or part of the MLS.

What say you to that? Just asking...

What if the agent was a member of the board?

Quote:
There are some REALTOR members (and all members of my MLS must also belong to NAR) that will not cobroke with a non-NAR salesperson because... non-NAR salespersons are not bound by NAR COE.


I know this - is that explained to sellers?
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#412494 - 09/10/12 09:39 PM Re: Procuring Cause [Re: broker]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7950
Loc: Vermont's North-East Kingdom
Originally Posted By: broker
". . . Nothing was signed at showing . . ."

Doesn't North Carolina have a Mandatory Agency Disclosure Form which must be given, and a Buyer signature acknowledging receipt obtained, at the first substantial contact; and a showing is substantial contact.

That "Form" has proven be very helpful as proof of procuring cause for many Listing Agents . . . . and a real incentive for them to use it.
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Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#412501 - 09/10/12 10:55 PM Re: Procuring Cause [Re: broker]
KT Offline
Major Contributor

Registered: 01/18/05
Posts: 1581
Loc: Ohio
Two things. Most companies who are in the MLS will not pay those who are outside their MLS - unless, they (one or the other co's belongs to a different system.) The whole point of a multiple listing system was for brokers to say they would cooperate with other brokers & offer some kind of compensation.

The other thing, is that procuring cause is way more involved than simply showing a house from a sign call. There has to be a whole bunch of uninterupted chain of events - you know, working with a buyer for it to take place.

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#412505 - 09/10/12 11:26 PM Re: Procuring Cause [Re: broker]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: broker
When the seller signed the listing agreement, they were told that part of the commission would go to a buyers agent if one brought an offer. There is no discussion whether or not it is for an agent that is a "Realtor" or part of the MLS.

What say you to that? Just asking...

What if the agent was a member of the board?

Quote:
There are some REALTOR members (and all members of my MLS must also belong to NAR) that will not cobroke with a non-NAR salesperson because... non-NAR salespersons are not bound by NAR COE.


I know this - is that explained to sellers?


"They were told" or a promise to compensate a buyer agent was made IN and by the Listing Agreement in writing? What does the ERTS actually say?

What I say is that typically how, to whom, and how much commissions are split is up to the listing broker. That, according to my ERTS, the listing broker may deal with other brokers in any manner he sees fit.

The commission belongs to the listing broker and s/he may do with that commission as s/he pleases. IF s/he offers to cooperate with other brokers, that offer to cooperate is made to other brokers in whichever board(s) s/he belongs to. So, if the buyers' agent in this instance is not a member of the listing agent's board, no offer of compensation was made to that agent.

"Is it explained to sellers"? I've never asked another Broker about what s/he has as a commission policy, nor would I. If I attempted to write a contract on a non-board member's property, I'd definitely ask "will you cobroke?' FIRST. If they said, "No", I wouldn't in a million years ask, "Does your seller know that? Did you tell your seller? What's the point? The seller offered THE LISTING BROKER a commission to sell his/her property, period. What the broker does with the commission is his/her business. Would you ask to see a listing agreement between that broker and that seller? Think you'd get to see it?

And as far as not cobroking with a non-NAR salesperson, some agents/brokers believe that it's in the best interest of the client.

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#412523 - 09/11/12 11:50 AM Re: Procuring Cause [Re: DueDiligence]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2404
Loc: Outer Banks
Originally Posted By: DueDiligence
What I say is that typically how, to whom, and how much commissions are split is up to the listing broker. That, according to my ERTS, the listing broker may deal with other brokers in any manner he sees fit.

The commission belongs to the listing broker and s/he may do with that commission as s/he pleases.



This does not hold true for NC realtors using the NCAR listing agreements. In NC the listing agreement actually lays out how much of the commission will be split and with whom it will be shared.

If there is a change from the signed listing agreement, like in the scenario laid out by the OP, the agent is required to notify the seller that the cooperating agent will not be compensated.
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Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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#412537 - 09/11/12 02:41 PM Re: Procuring Cause [Re: broker]
Pikes Peak Offline
Major Contributor

Registered: 12/15/04
Posts: 2799
Loc: FL
Procuring cause disputes between a REALTORŪ and a non-REALTORŪ are not subject to mandatory arbitration.
The buyer had a right to be represented by a broker. The listing broker could not have represented the buyer and would have been a transaction broker, sellers agent, dual agent or facilitator.
If the buyer had gone to an attorney, would the listing agent refuse to pay the attorney?
The seller in our listing agreement determines how much is paid to the co-operating broker, not the listing agent.

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#412543 - 09/11/12 03:29 PM Re: Procuring Cause [Re: Bigtoe]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: Bigtoe
Originally Posted By: DueDiligence
What I say is that typically how, to whom, and how much commissions are split is up to the listing broker. That, according to my ERTS, the listing broker may deal with other brokers in any manner he sees fit.

The commission belongs to the listing broker and s/he may do with that commission as s/he pleases.



This does not hold true for NC realtors using the NCAR listing agreements. In NC the listing agreement actually lays out how much of the commission will be split and with whom it will be shared.

If there is a change from the signed listing agreement, like in the scenario laid out by the OP, the agent is required to notify the seller that the cooperating agent will not be compensated.



BTW, isn't NC a "subagency" state? I had an opportunity to look over transaction paperwork out of NC about 2-1/2 years ago and it looked like subagency. That would make a difference.

Anyway, I did ask the OP what the ERTS indicated.

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#412550 - 09/11/12 04:25 PM Re: Procuring Cause [Re: DueDiligence]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
Does the listing agreement give you the option to not pay the buying agent? (if the split is spelled out).

If the original showing agent didn't offer representation at the time of showing, you probably don't have a commission dispute. So you are left with the deciding of whether or not the non MLS member represents a ready, willing, and able buyer.

If we assume that this is a good buyer, why would you not offer at least some commission. You would probably not be obligated to offer compensation as spelled out by your MLS but offering something would seem reasonable. You may incur some additional work, and so adjusting that payout would seem acceptable.

You are obligated to work in the best interest of the seller, turning away a ready willing and able buyer with an acceptable offer does not accomplish that regardless of who is on the other side. If this was a clouded transaction than you would have reason to turn the buyer away, but what you have described doesn't show that.

Even though this agent is not a MLS or NAR member, YOU are still bound by the Realtor Code of Ethics (do no harm)and if you cost your seller the opportunity to sell their home you MAY be in violation. You may also incur some liability should the eventual sale of the property be for less money, or from a less qualified buyer.

You should disclose to the seller the possible pitfalls of working with an agent that is not bound by the "Realtor Code", and let them decide. I do not think that you can ethically or legally require the buyer to work with an agent that meets your approval.

This is one of those gray areas that eventually the courts will interpret, but you don't want that to happen to your transaction.
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Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#412554 - 09/11/12 05:23 PM Re: Procurring Cause [Re: broker]
slcagent Offline
Member

Registered: 05/11/12
Posts: 37
Loc: Salt Lake City, UT
This kind of thing is happening more and more. Discount brokers who don't want to show the property so they get the buyers to say that they are not working with an agent. Then all of a sudden an offer comes in and they are working with an agent.
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Salt Lake Condos for Sale

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#412557 - 09/11/12 05:58 PM Re: Procurring Cause [Re: slcagent]
Dodger52 Offline
Member

Registered: 10/14/11
Posts: 266
Loc: Montana
This is why we have an agency disclosure form, and we should present the agency options before showing the house. Sub-agency is legal in my state, but most listings do not offer a commission to a sub-agent. If the buyer refuses representation I refuse to show the home. If they try to be sneaky and don't refuse I have documentation and the transaction is now clouded and it is no longer in the best interest of the seller to consider their offer.

If we all do our jobs, the folks looking for a quick and easy buck will look to other industries. Its up to us to make sure we don't get into these sticky situations.
_________________________
Dodger52 (Chris)
Prudential Montana Real Estate
www.MT-RE.net
www.facebook.com/MissionValleyMTHomes

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#412558 - 09/11/12 06:06 PM Re: Procuring Cause [Re: Dodger52]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
Originally Posted By: Dodger52
Does the listing agreement give you the option to not pay the buying agent? (if the split is spelled out).

If the original showing agent didn't offer representation at the time of showing, you probably don't have a commission dispute. So you are left with the deciding of whether or not the non MLS member represents a ready, willing, and able buyer.

If we assume that this is a good buyer, why would you not offer at least some commission. You would probably not be obligated to offer compensation as spelled out by your MLS but offering something would seem reasonable. You may incur some additional work, and so adjusting that payout would seem acceptable.

You are obligated to work in the best interest of the seller, turning away a ready willing and able buyer with an acceptable offer does not accomplish that regardless of who is on the other side. If this was a clouded transaction than you would have reason to turn the buyer away, but what you have described doesn't show that.

Even though this agent is not a MLS or NAR member, YOU are still bound by the Realtor Code of Ethics (do no harm)and if you cost your seller the opportunity to sell their home you MAY be in violation. You may also incur some liability should the eventual sale of the property be for less money, or from a less qualified buyer.

You should disclose to the seller the possible pitfalls of working with an agent that is not bound by the "Realtor Code", and let them decide. I do not think that you can ethically or legally require the buyer to work with an agent that meets your approval.

This is one of those gray areas that eventually the courts will interpret, but you don't want that to happen to your transaction.


Cogent response.

I don't think this buyer has been "turned away". I believe the offer was submitted, and that's the correct response from the Listing Broker/agent. So, the LA is acting in the best interest of the seller and did submit the offer to be judged on its own merits.

Compensation is the issue here, apparently. We first note that the buyer's agent didn't show or re-show the property to the buyer. In my market, where out-of area agents DO have the LA show the property and then write an offer for a buyer, compensation is handled on an case-by-case basis. Yes, the offer is submitted, but what happens with compensation is variable.

My personal rule of thumb in these instances is whether or not the ex-area/ex-board agent (either NAR or non) can actually make the trips necessary to handle the buyer end of the transaction. Does s/he have the willingness and ability and time necessary to earn the commission?

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