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What Is The Procuring Cause?

3-Minute Read
Published on October 29, 2020
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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 in real estate consists of the actions made by a real estate agent that caused the buyer to purchase the home. If you chose to work with multiple agents or switched agents partway through a sale, there may be a dispute regarding procuring cause.

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

The Procuring Cause In Real Estate

A procuring cause in real estate transactions refers to the real estate agent or broker whose actions resulted in the sale. Procuring cause disputes can often arise between agents and clients because of miscommunication.

Home buying transactions involve several parties. In addition to the buyer and seller, there is a buyer’s agent, a listing agent, a mortgage servicer, an underwriter and more. As in any situation where multiple people are involved, there is a lot of room for error, leading to a procuring cause dispute. 

What Happens In A Procuring Cause Dispute?

Several things can happen to cause a dispute. Additionally, there are several steps in a dispute process. Some of these steps include:

Commission Dispute

In a commission dispute, a real estate agent will file a complaint with the local real estate board if they do not receive the commission they feel 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 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 that 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 Factors In The Dispute

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

  • If an offer of compensation was made through the MLS
  • Nature of the transaction
  • Terms of the listing agreement
  • Terms of the offer to compensate
  • Roles and relationships of the parties involved
  • Conduct of the broker, buyer, and seller
  • Breaks in continuity such as abandonment or estrangement

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How To Avoid Procuring Cause Disputes

There are several ways a home buyer can avoid causing a commission dispute. When going through the home buying process, remember the following:

Communicate If You’re Working With Another Agent

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, but remember to communicate about your working relationship with your agent.

Sign A Buyer-Broker Agreement

A buyer-broker agreement solidifies a working relationship between a buyer and an agent or broker. Be sure that you are working with the right agent for you before signing the buyer-broker agreement.

Follow Open House Protocol

There is a protocol for open house events. 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.

Bottom Line

Procuring cause disputes happen when there is a question 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.

If you have further questions about the home buying process, be sure to check out our Learning Center. There, you will find information on buying, selling and refinancing your home.

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Call our Home Loans Experts at (800) 251-9080 to begin your mortgage application, or apply online to review your loan options.

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