An agent who ultimately caused a buyer to purchase a home and earned the commission is called

The process of buying a home has many steps. Each step leads to the next, and typically includes the help of a real estate agent. The procuring cause of the property sale consists of the actions made by a real estate agent that caused the buyer to purchase the home. If the buyer chose to work with multiple agents or switched agents partway through a sale, a dispute regarding procuring cause may be a concern.

This article will cover more about the procuring cause in real estate and what happens when there’s a dispute.

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A procuring cause in real estate transactions refers to the real estate agent or broker whose actions resulted in the sale. As a result of their actions, that real estate professional is compensated with a commission from the property sale.

It’s difficult to pin down an exact procuring cause definition because a wide variety of home sale steps qualify for it, ranging from providing assistance during a bidding war to price negotiation.

In addition to the buyer and seller, home buying transactions involve several parties: a buyer’s agent, a listing agent, a mortgage originator, an underwriter and more. As in any situation where multiple people are involved, a lot of room for error exists, leading to a procuring cause dispute. Procuring cause disputes can often arise between agents and clients because of miscommunication.

Several steps are taken over the course of a dispute process. Let’s review some of them.

Commission Dispute

In a commission dispute, a real estate agent will file a complaint with the local real estate board if the agent doesn’t receive the commission they were owed in a transaction.

Arbitration

Procuring cause disputes are often resolved outside of court by a hearing panel. These panels can address disputes between real estate brokers – or even between brokers and their clients.

The Procuring Cause Arbitration Worksheet

The National Association of REALTORS’® (NAR) Code of Ethics & Arbitration Manual provides a worksheet with questions used to help the hearing panel mediate these disputes. Some of these questions include:

• Who was the first person to introduce the buyer or tenant to the property?
• When was the buyer or tenant first introduced to the property?
• Was the property introduced to the buyer or tenant at an open house?
• Did the buyer or tenant find the property on their own?
• Did the broker or agent who first introduced the buyer to the property maintain contact with the buyer or tenant?
• If more than one broker was involved, when did the second broker enter the transaction?

Other Dispute Factors

Some additional factors considered by a hearing panel during a procuring cause dispute include:

• If an offer of compensation was made through the MLS
• The nature of the transaction
• The terms of the listing agreement
• The terms of the offer to compensate
• The roles and relationships of the parties involved
• The conduct of the broker, buyer and seller
• Any breaks in continuity such as abandonment or estrangement

A home buyer can take several steps to avoid causing a commission dispute. When going through the home buying process, remember the following:

Be Honest About Working With Other Agents

It’s important to let your agent know if you’re working with another agent. Most agents will ask a client upfront if they’re working with anyone else, so remember to communicate about your working relationship with your agent.

Sign A Buyer-Broker Agreement

A buyer-broker agreement, or buyer agency agreement, solidifies a working relationship between a buyer and an agent or broker. This contract legally confirms the real estate professional’s obligations and responsibilities, while also acting as a record of their procuring cause in the transaction. Be sure that you are working with the right agent for you before signing the buyer-broker agreement.

Follow Open House Protocol

Open houses follow a certain protocol. When attending an open house, you should show your agent’s card to the agent hosting the open house. Additionally, when you sign the guest book, include your agent’s name next to yours. The intention is to be open about who you are working with to avoid any future disputes.

Procuring cause disputes happen when a question arises about who receives the commission on a real estate sale. Disputes can occur at many steps in the home buying process but are generally easily avoided by clear communication.

Your best resource for avoiding procuring cause disputes – as well as navigating your home buying journey as a whole – is your real estate agent. In order for your real estate agent to find the home that works best for you, you’ll need to be preapproved so you know how much house you can afford. Get preapproved with Rocket MortgageⓇ today.

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Whether you’re in the market for a new home or selling the one you own now, chances are you’ll want to find a real estate agent who can help you navigate the process.

Listing agents help you market and sell your home. Selling agents help you find and buy one. And while their titles might sound similar, their roles in the transaction are quite different. If you’re serious about buying or selling a home, it’s a good idea to familiarize yourself with the role each type of agent plays, and the advantages of having one in your corner.

What is a listing agent?

A listing agent, also commonly referred to as a seller’s agent, represents the seller in a real estate sale — they literally list the house on the market. Their job is to set a competitive price for the home and then bring in potential buyers to see it. While it’s certainly possible to sell a house without one, working with a listing agent gives you access to their expertise and knowledge of the local housing market. They have the most current and detailed information on the sales of comparable properties in your neighborhood, which allows them to price your home competitively.

Once you’ve set a price, listing agents actively market the property. They’ll help stage and style the home to present it in its best light, and even hire professional photographers to take high quality pictures. Listing agents not only show the home and hold open houses, but they help evaluate potential buyers as well, ensuring that you receive only serious offers.

When an offer is received, the listing agent walks the seller through the negotiations, helping handle any paperwork and ultimately closing on the sale. For those services, listing agents typically earn around a 2.3 percent commission on the sale price.

What is a selling agent?

A selling agent represents the buyer in a home sale. That might sound confusing, but there’s logic behind the terminology: Prior to a contract being signed, the agent representing the buyer is usually called the buyer’s agent. After the two parties agree to terms and the house is under contract, the buyer’s agent is then referred to as a selling agent. Why? Because they produced a buyer who purchased the home. The terms selling agent and buyer’s agent are typically used interchangeably, and their duties are the same.

A selling agent identifies properties their clients might be interested in purchasing, contacts the listing agent to set up showings, presents the sellers with offers from their clients and guides them through closing once an offer is accepted.

The services of a selling agent can be especially valuable amid the current overheated housing market. Having an experienced agent at your side can help you navigate the competition more successfully, particularly at a time when bidding wars are common. A selling agent’s fee is typically paid for out of the commission paid by the seller. The average commission paid to agents representing buyers is about 2.69 percent.

Do you really need one (or the other?)

The internet changed the ways people shop for homes, and the pandemic changed them even further. In fact, more than half — 51 percent — of the homes purchased in 2020 were found online, according to the National Association of Realtors. Still, 87 percent of buyers use representation to manage the transaction, and 90 percent of sellers use a listing agent.

You can certainly go house hunting or put up a “for sale” sign on your own, but enlisting the help of a professional does offer benefits. In some cases, it might even be necessary: Some listing agents will only accept offers from a buyer’s representative.

If you’re interested in working with a listing or selling agent, interview multiple agents and ask for references from former clients. Taking the time to find the right agent could help you realize your home’s best value, or get you into your dream home.

Bottom line

For most people, buying or selling a home is one of the largest financial transactions of their lifetime. Before embarking on a house hunt or listing your property for sale, be sure you understand the role that the listing and selling agents play, and how they can help you. Engaging the assistance of an industry professional to guide you through the process, whether you’re buying or selling, can help ensure you avoid pitfalls and secure the best possible deal.