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Title Tip: What is procuring cause?

by | May 10, 2023 | Real Estate Litigation |

What is procuring cause? How do you make sure that you are the procuring cause of the sale, so you earn your Commission?

These questions are vitally important to Realtors® in a competitive market. The cases say that a broker is considered to be the procuring cause of the sale when he or she brings the buyer and the seller together, they negotiate, without abandonment, and ultimately agree upon a sale. However, when two brokers are involved in the sale, it is usually not true that one of them is solely responsible for bringing the parties together and the other one had absolutely no effect upon the negotiations. When implementing the test for procuring cause, the courts have generally looked to see which broker supplied the ultimate or decisive increment which was necessary to convince the prospective buyer to purchase the property.

A Realtor In Front of a Home for Sale

Courts have said that a Commission is payable not to the broker who first speaks of the property to a prospect, but to the broker who is the procuring cause of the sale – whether he or she is first or second to engage the attention of the purchaser. This means that a broker who was influential in originally kindling a buyer’s interest in the real estate, or was the person who first introduced the buyer to the seller, or was the person who first showed the property to the buyer, does not, of itself, entitle the broker to a Commission. It is also not necessarily true that the broker who expends the greater effort will be entitled to the Commission. The effort that is important is the effort which was effective in convincing the buyer to purchase the property. Very often a court can identify, without too much difficulty, which broker supplied the decisive increment necessary to make the sale possible. In some cases, the courts say that because of the stature, eloquence, charisma, or sheer effort of the successful broker they are simply more convincing than the other broker.

Signed Real Estate Contract Successful Closing

What does all this mean to you, the Realtor®? How can you be sure to walk away from a transaction with the Commission you earned? The first step to avoiding a procuring cause lawsuit is to make sure that you have a written agreement with your customer. While listing agreements are common, I know our market and I know written buyer exclusive agreements are tough. However, they protect Realtors so I strongly recommend them when possible. Second, make sure you document your efforts in writing. Many Realtors® use a CRM program to record their customer interactions and send follow-up emails to confirm actions taken. This is a great way to create business records that show you worked to complete the transaction.

If you have any questions or concerns about procuring cause, give me a call and we can walk through them. I am available 24/7 at 239-784-5556.