This morning I crossed paths with the concept of procuring cause, the tenet by which real estate professionals earn their commissions. While it seems to be an agent-vs-agent issue, it also can have ramifications for the consumer.
In short, procuring cause is the action (or actions) which leads a prospective buyer to write an offer on a given piece of property. Simply sending automated listings, as I do to two dozen clients and prospects on a daily basis, generally would not be recognized as sufficient action; showing a property to a prospective buyer can elevate a burgeoning real estate level to the level where procuring cause can be shown. Other such actions are recommending lenders, other professionals related to the offer and, naturally writing the offer.
This morning I met with someone who had driven past a horse property in Avondale. Since he was not working with a buyers' agent, he called the listing agent and discussed the property. He set an appointment with the listing agent and met with her over a weekend to view the property. She even went so far as to recommend a lender to this prospective buyer.
Rather than use his lender, he called USAA Mortgage and was prequalified with the caveat that he sell his house. This set in motion of chain of events (USAA calling my company's relo department, as we're a preferred vendor; my relo folks calling me as I'm a USAA Certified Relocation Specialist; me calling the client yesterday to set an appointment) that led to me meeting with them at 7:30 a.m. The rush was needed because the listing agent had told the buyers that she was expecting another offer and they needed to hurry if they wanted to submit an offer. And having to submit their offer quickly and given they had to make the offer contingent upon the sale of their house, they needed to get them home on the market pronto, ready or not.
Nothing about the above scenario was particularly complicated except this ... along the way, the buyer decided they would prefer independent representation in negotiating the purchase of this horse property. And it was here that the challenges began to mount.
Legally, any licensed agent could write an offer on the buyers' behalf. But since the listing agent clearly could show procuring cause, there was no guarantee this agent writing the offer would be paid in the transaction unless the listing agent were willing to make some sort of accomodation in the interest of selling the property. This agent was not so inclined. That left three possible scenarios:
1) The buyer pay for their own representation out-of-pocket. In what adds to the body of evidence suggesting that the idea of buyers paying for their own representation out of pocket isn't as cut and dried as some would have you think, requiring this of the buyers likely would have left them without enough of a down payment to purchase the new property.
2) The buyers make their offer contingent upon their agent being paid. This would be a delicate maneuver for two reasons: first, agents are not permitted to negotiate commissions in the contracts they write. But if the buyers are the ones making the request, welcome to the Grey Zone. Second, even if the sellers were willing to pay the buyers' agent, this doesn't lessen their financial responsibility to the listing agent - the commission is set in the Exclusive Right to Sell form and cannot be altered outside that agreement by anyone other than seller and listing agent/broker.
3) The agent could write the offer and not receive any compensation; the sole compensation would come with the listing. Idealistic, perhaps. Realistic, probably not - not for reasons of greed but for logistical and legal reasons. Once the offer is written, the agent has assumed responsibility on behalf of his brokerage and now becomes liable for a number of different items in the transaction. Liability without compensation is professional suicide.
In the end, the client elected to use the services of another agent to write the offer and cross swords with the listing agent. Again, legally, anyone can write the offer - not anyone can get paid. But these buyers also now will be dealing with a listing agent being forced to present an offer from clients (and a possible commission) she fully expected to have herself. Could that make for a less than ideal scenario when their offer is presented?
You can be the judge.
So how can this be avoided? In some cases, the urge to call on a property can be overwhelming for a prospective buyer, even one who had no intention of moving when they left the house in the morning. However, in their own best interest, it might be best to stifle the urge to schedule immediate appointments and instead come home and plan ... if you do not already have a real estate agent, find one. Independent representation always is the better course of action (though I'm not as manic about it as some anti-dual agency advocates.)
Call a family member, ask who they have used. Talk to a friend. Or jump on the Internet and e-mail or call the first guy you see with a really cute beagle - who also, coincidentally, knows the contract more thoroughly than a large percentage of his peers (the man, not the dog.)
Picking up the phone may seem harmless enough but it truly does have far-ranging ramifications.
(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes | 
