Profile picture for wisconsinhomebuyer

Question as to what triggers a procuring clause?

I on my own, found a listing on a "zillow-like" website and contacted the listing agent for a home previewing.  He was out of town and the secretary told me she would find of his employees to show me the house.  After the showing, I express an interest in writing up an offer, but from an indepdent agent of my choosing that doesn't work for this real estate company.  I am told essentially because of the "procuring cause", I'm stuck with the employee.  Does this mean I can't get my own represenation (aka buying agent)?  To buy the home, I would have to be in a dual agency situation, in which the company would represent both sides?  Given that I signed nothing, was not told of this arrangement would be triggered by a home showing, found the house from the listing agent's listing on a website on my own, originally tried to contact the listing agent and would have offered regardless of who did the home tour this doesn't seem fair!  What are my options?
  • November 12 2013 - US
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (14)

Best Answer

Here's an interesting paper. Page 14 is of particular interest.
  • November 13 2013
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for wisconsinhomebuyer
Thanks Hamp!

Here is a quote for future googlers finding this post:

--

Did the buyer express the desire not to deal with the broker and refuse to negotiate through him?

A buyer may decide not to negotiate through a broker and unless the broker has an exclusive right to sell agreement, the broker will not be the procuring cause of a subsequent sale. Walker v. David Davies Inc., 296 N.E.2d 691 (Oh. App. 1973). In Walker, the broker had no direct negotiations with the buyer; in fact the buyer expressed a desire not to deal through the broker. Id. at 695. Thus, the court held that the broker was not the procuring cause even though he had incurred expense and spent time trying the sell the property. Id.
  • November 13 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

That's fine, Wisconsin, but the opposite is true.

Real estate law is still evolving. Historically, brokers advertised listings (properties on which the seller signed a commission agreement), because it was easier to find a buyer for a specific property than it was to find a specific property for a buyer.

With the introduction of the multiple listing system, cooperating listing brokers agreed to share a portion of the commission if another member procured the buyer. That's where we're at today. 

Keeping that in mind, there is no way on G-d's green earth that listing brokers are going to stop at marketing the property and pass prospective buyers off to other brokers. Even though it potentially creates a dual-agency situation (or a broker-customer relationship), and even though a high percentage of MLS sales are co-brokered, listing brokers just aren't going to go along with that.

All the best,
  • November 13 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for CCarron
In Virginia, where I sell real estate, a law enacted in 2012 now requires a listing agent to make a specific disclosure to "unrepresented" parties--even people dropping in to an open house if they don't already have a buyer agent--explaining that the listing broker and listing agent represent only the seller of the property. My disclosure to unrepresented parties goes on to explain that they can obtain their own representation from an agent/broker of their choice. All of that being said, dual representation still is lawful in Virginia if approved by the buyer and the seller.  I would never represent the buyer and the seller because I consider the conflict of interest to be too great, even though it's legal.  On the other hand, a buyer may want to be unrepresented.  I can still draft the contract documents and provide "ministerial" services to make sure the transaction closes.  I can offer a rebate from my commission to the buyer if he or she is unrepresented because I am not sharing my commission with a buyer agent.  All of that is legal, and ethical. I don't agree that I should share my commission with a buyer agent who does nothing but draft the offer after I have paid money out of pocket for advertising, brochures, flyers, photos, etc. and spent lots of time composing social media listings and ads, showing the property, etc. I do share my commission with buyer agents when their work "procures" the buyer, not otherwise. ... A "procuring cause" claim is not brought by the listing broker.  The listing  broker gets the commission from the seller pursuant to the listing agreement.  A "procuring cause" claim is brought by a broker other than the listing broker, against the listing broker, claiming a right to compensation (commission) for having "procured" the buyer. The burden is on the broker making the compensation/procuring cause claim to show that without the unbroken chain of his or her agent's efforts, the sale would not have occurred. It is not up to the buyer to decide who gets the commission that the seller is paying. That is a matter between the brokers, based upon the offer of compensation made by the listing broker to other brokers through the multiple listing service or otherwise consistent with the seller's instructions in the listing agreement. There is no law that requires a seller or a listing broker to offer any compensation to other brokers. Buyers can retain a buyer agent/broker that they pay themselves. What a buyer can't do is to change the terms of the compensation offer that the listing broker has made to other brokers. In Virginia, even if a broker or agent fails to make a legally required disclosure to a buyer, that does not affect the outcome of a "procuring cause" claim for compensation, although it may (and should) get the broker or agent into disciplinary trouble.
  • November 13 2013
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for wisconsinhomebuyer
There should a state law, that no real estate can make a claim to procurement from an action, unless they fully disclose that such action will result in procurement and the buyer (or seller) losing such rights/flexibility to designate procurement to an independent advisor of their choosing.

Before each house showing, the agent should fully disclose whether it will involve exclusive procurement to that property.  Same with "sharing leads".  Ask the buyer if they are interested a property of that rough description before emailing to them the details.  Most buyers wouldn't understand that this denies them or an agent of their choosing to find that property on their own effort.

Furthermore there should ALWAYS be an option out of dual-agency situations.
  • November 13 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

The arbitration board guy seems to negate the requirements of disclosing agency at first substantive meeting, explaining dual agency, and the ramifications of dual agency. If procuring cause is that clear cut, then every listing ever advertised, could inherently refuse to pay commission to a BA, since they advertised, and a Buyer admitted seeing the ads. This also seems to negate the intent of the commission split agreement inherent in MLS participation.

If I were the BIC at the listing Agency, there is no way I'd let my Agent(s) file a procuring cause complaint, on a listing we showed once (which is our duty), and the customer refused our offer to be their dual agent, or a designated agent, in order to exercise their right to have an more unbiased Agent, even if they hadn't hired that Agent, yet.

Showing a house is part of the duty to the Seller. Showing it to people you have an existing Agency agreement with is the easy way to keep the whole commission in house. Convincing a customer to become your client, after a dutiful showing, is the other way to keep the whole commission in house. Failing to do either, means you're splitting the commission.

The whole thing isn't even supposed to be about the commission. It is supposed to be about a quick, efficient, smooth, and fair sale. Code of Ethics my rumpsky. This is exactly why the NAR gets sneered at, and has gotten little of my money over the last thirty years. Just my opinion. Certainly I'm wrong but I don't care. I sleep like a fiduciary log.

I also hope the OP buys elsewhere!
  • November 13 2013
  • 3Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Chas, great answer.

Wisconsin, I think it's easier to grasp the concept if you look at it this way: If you call the listing broker to see the property, the listing broker can claim that they do not have to pay a commission to another brokerage to represent you.

From the listing broker's point of view, you found the property on the internet because they put it there for you to find.

As a practical matter, though - if you have an agent of your own, they can call the listing broker and likely settle the matter in your favor. Likely, not assuredly.

However, you set off another fuse, which is the idea of hiring a "hit man" to negotiate this likely one-off transaction on your behalf.

All the best,
  • November 13 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for CCarron

I'm on the arbitration committee of my local Realtor(R) association that resolves "procuring cause" disputes. Let me clarify what "procuring cause" means to you, the buyer. When a seller lists a property with a broker and that broker advertises the property in the multiple listings, that constitutes an offer of compensation to other brokerages to pay a specific part of the listing broker's commission to the other brokerage if the other brokerage procures the buyer. That's where the phrase "procuring cause" comes in. As the buyer, you can use whatever real estate agent you want, or no agent at all. However, if you have an agent from a brokerage other than the listing broker write up the offer on this property that you've already selected based upon the listing broker's marketing efforts and the showing, the listing broker apparently will take the position that your agent is not the "procuring cause" of the sale and therefore the listing broker will not pay a commission to your agent. That's reasonable, because the offer of compensation is intended to procure a buyer and you've already been "procured" without an agent from another brokerage.  If you sign a buyer agency agreement that requires you to pay your agent a commission if he/she doesn't get a commission from the listing agent, then you will have to pay that commission. Your agent's broker could make a claim of compensation against the listing broker, but given the facts that you've described, the arbitration panel or other decision-maker (I don't know how it's done in Wisconsin) probably would find that your agent was not the "procuring cause" of the sale and therefore not entitled to a commission from the listing broker. The situation would be different if you had seen other properties with your agent, your agent did a comparative market analysis of the various properties and based on that information, you decided to make an offer on the property you already had been introduced to by the listing broker.  In that situation, you had not made up your mind until your agent provided you with real estate services that resulted in your deciding to make an offer on the property so your agent would have a reasonable argument that she or he was the "procuring cause" of the sale. If this was helpful, please click the thumbs-up below.

  • November 13 2013
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Here's an article. There are hundreds. There has to be a "working relationship". A quick showing of an in-house listing, for a coworker, isn't a working relationship. Call the Broker of the listing, and threaten to Complain to the Regulators if they won't split commission with your Buyer's Agent. Also threaten to call their Seller and tell them what is happening. Or, have a Buyer's Agent do all that for you.
  • November 12 2013
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for wisconsinhomebuyer
Ofe, if I have a buyers agent show me the house after this individual did, won't that result in a procurement war?  If I haven't signed anything, can I get my own buyers agent and they would be entitled to the commission? 

Are there any website references on this type of thing.  I can't have been the first to fall victim to this...website > listing company real estate company > house showing > dual agency/procuring headlock?
  • November 12 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Here's the bottom line. You don't want to use their agency. You don't have to. If their Seller finds out they're running off potential Buyers by threatening them over the commission, they'll have a complaint on their hands, and it won't be a procuring cause complaint. It'll be a negligence of fiduciary duty complaint.

If the person who showed you the house thinks they're deserving of a commission for it, then they need to split up the Listing Broker's side somehow.

You need to find a Buyer's Agent with cojones and write an offer. Then dare these wads to complain.

The listing Broker is always supposed to be the procuring cause of a sale. That's why the Seller's hired them; to procure a sale. You're being bullied.
  • November 12 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

When an agent takes a listing the listing agent is supposed to show that property to any person who is interested in seeing it.  I am sure that you were asked if you had a buyer agent, and since you didn't they assumed that you will working with them.  That is an assumption, now all you need to do is ask your buyer agent to make an appointment to see the property with you before writing the offer.

  • November 12 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for wisconsinhomebuyer
Thanks for the prompt reply.

I've signed nothing with nobody.  My only "sin" was to be shown the home by this "sub-agent".  I don't know the exact designations.  But it is the same real estate company and this "showing-agent" definitely described the "listing agent" as their boss.

The showing agent was the one who told me that procuring clause locked me in with them (when I brought getting an independent agent).

Any legalize/suggestions that I can use to counter would be appreciated!

  • November 12 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I don't think you're stuck with the sub-agent of the Seller. Who told you this? Did you sign anything with the Listing Broker's replacement Agent?
  • November 12 2013
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.