Procuring cause is a fundamental concept in real estate that plays a pivotal role in determining which real estate agent is entitled to a commission when a property sale is successfully completed. This principle often comes into play when there is a dispute over which agent was the primary factor in bringing about the sale, particularly in scenarios where multiple agents have been involved in the process. Understanding procuring cause is essential for both real estate professionals and clients to navigate potential conflicts and ensure fair compensation.

Definition of Procuring Cause

Procuring cause is defined as the chain of events, unbroken by any significant interference, that leads to the final sale of a property. In simpler terms, it refers to the agent whose actions directly resulted in the buyer’s decision to purchase the property. This concept is used to determine who rightfully deserves the commission when there is ambiguity or disagreement.

Factors Influencing Procuring Cause

Several factors are considered when determining procuring cause. These include:

1. Introduction of the Property: The agent who first introduced the buyer to the property or brought it to their attention often has a strong claim to being the procuring cause.
2. Continuity of Effort: The agent who continuously worked with the buyer, providing information, arranging viewings, and facilitating negotiations, is likely to be considered the procuring cause.
3. Unbroken Chain of Events: There should be a continuous series of actions by the agent that led to the sale without any substantial interruptions in working with the buyer.
4. Level of Engagement: The extent to which the agent was actively involved in guiding and advising the buyer throughout the process is also a critical consideration.

Common Scenarios Leading to Disputes

Procuring cause disputes typically arise in the following situations:

1. Multiple Agents Involved: When a buyer interacts with several agents before finalizing a purchase, it can be challenging to determine which agent’s efforts were most instrumental in the sale.
2. Open Houses: This is probably the most common situation that leads to a procuring cause dispute. If a buyer attends an open house hosted by one agent who shows them the property, but later purchases that property through another agent, the initial open house agent may claim procuring cause.
3. Agent Changes: If a buyer switches agents during their search, but the buyer ends up putting an offer in on a property shown to them by their first agent, that agent can claim that their initial efforts were the primary reason for the eventual sale.

Resolving Procuring Cause Disputes

Disputes over procuring cause are usually resolved through arbitration within real estate associations, such as local boards of REALTORS®. The arbitration panel will review the case, considering all relevant factors and evidence, and make a determination based on the principles of procuring cause.

Importance for Real Estate Professionals

Understanding procuring cause is crucial for real estate agents to protect their interests and ensure fair compensation for their work. Agents can take several steps to safeguard their commission:

1. Documentation: Keep detailed records of all interactions with buyers, including emails, texts, and notes from meetings and showings.
2. Clear Communication: Clearly communicate your role and the value you provide to clients, emphasizing the importance of loyalty and continuous engagement.
3. Buyer Representation Agreements: Use buyer representation agreements to formalize the relationship with clients, outlining the agent’s responsibilities and the terms of compensation. This will soon become a requirement in August 2024.

Conclusion Procuring cause is a vital concept in real estate, ensuring that the agent who is most responsible for bringing about a property sale is fairly compensated. By understanding the principles and factors involved in determining procuring cause, real estate professionals can navigate potential disputes and maintain positive relationships with clients and colleagues. For buyers and sellers, recognizing the importance of this concept can help in making informed decisions and avoiding conflicts during the transaction process.