Have you ever been driving down the street and seen an open house sign and thought, “I don’t want to bother my REALTOR®. I’ll just pop in and take a look. If I like it, I’ll call my REALTOR® and have them write up an offer.” Or have you ever seen a sign for a new build community and decided to just check it out without your REALTOR®? “Why bother my REALTOR®? I may not even like the community or the floor plans.” Or how about this one? You’re driving through a community you’ve been wanting to move to and you spot a For Sale By Owner (FSBO)sign. Surely it won’t hurt to ring the door bell and ask the owner what they’re selling the property for, will it? It just might, so don’t do it if you want to be represented by your REALTOR® and still entitle them to compensation.
In real estate there’s this thing called Procuring Cause? Black’s Law Dictionary, Fifth Edition defines Procuring Cause as: “The proximate cause; the cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime object. The inducing cause; the direct or proximate cause. Substantially synonymous with “efficient cause.”
Procuring Cause is complicated. There is rarely just one factor that’s the determining one in a procuring cause case. There are many factors to be considered when the procuring cause of a sale is in dispute. One that should not be the sole determining factor is whether one of the disputing parties is the buyer’s agent. Many other factors should be considered, such as:
• Who introduced the buyer to the property?
• Who provided the details about the property to the buyer?
• Which broker began a series of events that led to the sale without a break in continuity?
• Which broker could be left out of the transaction and have it still go together?
• And many other factors, too.
Representation and entitlement to compensation are separate issues. For example, you may walk in to an open house, speak with the agent holding the open house about the property, your real estate agent may write the offer and work with you throughout the entire sale, and they may end up not being entitled to compensation. This may happen because the agent holding the open house provided details to you about the property or the community that led you to make the decision to purchase the property.
Here is a quick guide on how to handle various situations if you want to be represented by your agent and still allow them to receive compensation:
1) At an open house: First, call your agent and ask them if they can show the property to you. If they’re not available and you absolutely must see the home now, tell the agent holding the open house that you are working with an agent and ask them if you can still see the property. If they say yes, view the property but do not ask the agent any questions or answer any of theirs.
2) At a new build: New build communities usually have a sign posted on the door to the sales office that states, “If you are working with a REALTOR® they must be present on your first visit.” Let the representative at the new build community know that you are working with a REALTOR® and ask them if you can walk through the models and still use your agent. Then, don’t ask them any questions. Address all questions to your agent. Remember that in almost all cases the representative at the builder’s office does not represent you. They represent the interests of the builder.
3) For Sale By Owner: If you see a For Sale By Owner sign, write down the address of the property and the phone number on the sign and give it to your agent. The seller may be willing to cooperate with your agent. Most people trying to sell their property by themselves don’t want to pay any commission. That’s why they’re doing a For Sale By Owner in the first place. However, many will allow you to work with your agent and will compensate them if your REALTOR® contacts them first.
4) For Sale Sign: If you see a For Sale sign, don’t call the agent on the sign. Call your agent, write down the address of the property and the phone number on the sign and give it to your agent. Your agent can get you in the home to preview it and you can ask them any questions you have.
5) House Listed Online: If you find a house listed online that you’re interested in, don’t call the phone number of the agent (or agents) listed next to that listing. Let your agent know where you found the listing and give them the address. They can answer any questions you have about the property and can get you in to preview the home, too.
Now, there may be a time when your agent is not available and you don’t want to miss the opportunity to purchase a home by waiting for them to get back to you. We recommend that you have this discussion with your agent when you first meet. Ask your agent who you should call if they’re not available. They may have a partner or office manager who can help you so that you don’t lose a house you love.
If you’d like more information about Procuring Cause go to https://www.nar.realtor/code-of-ethics-and-arbitration-manual.
We hope this is helpful. Happy house hunting. Now call your REALTOR®.