We have had several questions on Procuring Cause lately.
Check out this video from Florida REALTORS about Procuring Cause:
We shared this Q and A from Florida REALTORS previously. It is great reading and does provide some insight into how procuring cause works.
For all of you that have called, we have discussed that it is NOT BLACK AND WHITE.
My advice to you is that the first time you speak to a client on the phone always ask “Are you working with an agent?”
If they seem to have seen homes already, ask, “Who are you working with to look at those properties?”
Buyers often do not know that they are doing anything wrong and it is up to you to ask enough questions to determine if they are working with another agent so that you are not wasting your time!
When working with Buyers it is helpful to have a consultation with them and have a Buyer Broker Agreement signed with them at the outset of your relationship. This does not guarantee that you will be procuring cause, but just the conversation will educate them on how things work. They call you no matter what they see – online, sign, fsbo, etc.
Hope this Q and A will also help.
JULY 15, 2019
Dear Anne: Don’t Turn Your Back On This Agent
Anne Cockayne, Florida Realtors
A buyer lost a bid, in part, because the sellers wanted their agent to list my buyer’s current home as part of the deal. After that, the buyers put any purchase on hold but, a few weeks later, completed the deal using only the seller’s agent. A clear ethics violation, right?
Dear Anne: I recently showed a listing and wrote an offer for my buyer that was contingent on the sale of their current home. In a gesture of good faith, I shared the buyer’s address and the prospective sales price of his current home with the listing agent, in part to convince the seller that my buyer’s offer was solid based on the value of their current home.
The listing agent then called me and said he could make the deal come together on two conditions:
We come up with an offer closer to listing’s asking price.
Allow him to list my buyer’s current property in order to expedite both sales. The seller, he claimed, believed that this listing agent could work both transactions and get the job done quicker.
The nerve of this guy!
As a result, my buyers switched gears and decided to sell their current home before shopping for another one so they had equity in hand, and they decided to undertake a few home improvement projects to prepare their house for market. We agreed to put our house hunting efforts on hold, and that I would stay in touch.
A week later, the property we put the offer on went pending, which wasn’t surprising. But this did surprise me: I found my buyer’s property listed on the MLS by you-know-who.
I called my ex-buyer. They told me the listing agent presented a marketing plan that would enable them to purchase his listing. For them, it was a win-win situation, and they felt it was the best thing for them to do. For me, it was lose-lose. The buyers thanked me for my time and that was it.
I’m out two commissions thanks to this greedy agent, and I’m sure he violated the Code of Ethics. If found in violation, will my association’s arbitration panel award me the selling commission on the property they purchased? What are your thoughts on all of this? Signed, Fuming
Dear Fuming: While I understand why you shared information about your buyer’s property, you unintentionally opened the door and let an aggressive agent move in on your buyer.
While the listing agent’s tactics were aggressive and brash, he did not violate the Code of Ethics. Why?
No one owns the buyer.
If you had an agreement to represent the buyer and the listing agent was aware of it, then you may have grounds for a possible violation of Article 16 of the Code, which says Realtors® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other Realtors have with a client. But if you had an agreement and the buyer approached the listing agent first to provide substantive services based on Standard of Practice 16-13 of the Code of Ethics, the listing agent would be in the clear because the buyer approached him and not the other way around.
You did not have a listing agreement on the buyer’s property; therefore, the listing agent can approach your buyer to list his property. No violation there either.
Ethics complaints and arbitration requests are held in separate hearings even when the concern arises from the same set of circumstances – one to hear the allegations of unethical conduct and the other to hear the commission side of the dispute. It’s all about due process because allegations of unethical conduct should not be used as leverage to sway an arbitration panel’s decision.
Here’s a quote from NAR’s Arbitration Guidelines:
Arbitration Hearing Panels are called on to resolve contractual questions, not to determine whether the law or the Code of Ethics has been violated. An otherwise substantiated award cannot be withheld solely on the basis that the Hearing Panel looks with disfavor on the potential recipient’s manner of doing business or even that the panel believes that unethical conduct may have occurred.
Have an ethics or rules question? Email us at legalnews@floridarealtors.org with “Dear Anne” in the subject line.
Anne Cockayne is Director of Local Association Services for Florida Realtors
© 2019 Florida Realtors®
AUGUST 16, 2019
Dear Anne: Don’t Turn Your Back on This Agent – Round II
By Anne Cockayne Last month’s article on procuring cause generated a lot of interest, with some members disagreeing on which agent deserved a commission. But in real life, answers aren’t always easy – and they’re impossible until you hear from both sides.
ORLANDO, Fla. – Dear Anne: I found your article in the June 17 Legal News interesting because, while no one owns a buyer, it seems there was interference from the other Realtor®. Dear Anne: I feel like you partially missed the boat on your response in the latest “Dear Anne” column. Dear Anne: I read your answer to a question on June 17 regarding proof of an offer being submitted to seller for a REO property. I’m a little confused and would like more clarification. Dear Readers: As it turns out, my last article generated quite bit of interest. One of my readers said he agreed that an ethics violation did not occur, but he believes I “partially” missed the boat because I did not point out that the original buyer’s agent was the procuring cause of the sale and owed a commission. In summary, the buyers’ agent made an offer contingent on the sale of the buyers’ home. Then the seller came back with an unusual request – to have his listing agent also list the buyer’s home in order to expedite both sales, saying he was confident his agent could get things done quickly. Suddenly, the buyers decided to put their home shopping on hold to focus on selling their home before they buy. Sound fishy? It does to me. So, let’s dive into the procuring cause side of the story. To be upfront, I cannot tell you if the original buyer’s agent is procuring cause for two reasons:
I’ve only heard one side of the story.
It’s up to an arbitration panel of three-five arbitrators to make that judgement call – not me. Arbitrators weighing a procuring cause decision must carefully consider the efforts on the part of both agents – do a “walk a mile in my shoes approach” to piece together the whole story to the best of their ability. The National Association of Realtors® (NAR) provides hearing panels with a worksheet they should use to guide them step-by-step through the transaction so they can determine who did what and who was ultimately responsible for the buyer ending up at the closing table. A comprehensive list of questions can also be found on NAR’s website. Here’s what we do know about this case: The buyer’s agent showed the property and began negotiating the offer when the seller came back with his unusual request. But out of the blue, the buyers decided to put everything on hold. Here’s what we don’t know: What occurred behind the scenes between the listing agent and the buyers? Yes, we have our suspicions, but we need to know more. There are several definitions on procuring cause, but we’ll defer to NAR’s, which says, “procuring cause in broker-to-broker disputes can be readily understood as the uninterrupted series of causal events which results a successful transaction to come about.” The question is, did the buyers’ agent experience an interruption in his series of events after the buyer decided to step away in the middle of negotiations? The panel’s job is to ascertain whether a “break” occurred or not, and if so, did a new series of events begin with the listing agent? Or did the second series events occur while the first one was in motion? Who knows? The listing agent holds the critical pieces to the puzzle and that’s why we need to hear from him. While members of the panel may believe the listing agent’s actions were underhanded and sneaky, did he get the job done? If he did, he could be the procuring cause. This takes us back to my first article where we concluded the agent’s behavior was not unethical and should have no bearing on whether he earned the commission or not. On the flipside, a hearing panel could conclude that it was the buyers’ agent who brought a ready, willing and able buyer to closing. Let’s face it, this one could go either way, and sitting on an arbitration panel is a tough job. I know this sounds wishy-washy, but there is no clear-cut answer on how a commission can be awarded. Who showed the property first or who wrote the offer doesn’t make it a slam dunk win. Frustrating? Yes, I know. Best solution? Mediate. It’s better to sit down in an informal setting to negotiate an agreement acceptable to both sides of the dispute. It’s a win-win and it beats going to arbitration and taking your chances on the outcome. Anne Cockayne is Director of Local Association Services for Florida Realtors © 2019 Florida Realtors®
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