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With the National Association of Realtors (NAR) on the ropes, reeling from Clear Cooperation, agent dissatisfaction with the settlement, as well as the organization’s handling of its scandals, now is the perfect time to strike a blow to get rid of procuring cause.
What is procuring cause?
NAR’s Arbitration Guidelines in relation to Article 17 of the Realtor Code of Ethics define procuring cause as “the uninterrupted series of causal events which results in the successful transaction.”
According to the NAR settlement FAQ, as a legal concept, procuring cause predates both the organization and its code of ethics. With offers of compensation communicated off-MLS following the settlement, buyer agreements have become an important factor in how buyer brokers protect their compensation in the event of a contractual dispute.
With procuring cause, an agent works with a buyer, and if that buyer ends up using a different agent to write an offer, then the first agent can file a complaint with their local board and go after the second agent’s commission. Procuring cause is NAR’s equivalent of rewarding the kid who licks the lollipop to make sure no one else will want it.
Who’s really to blame?
You’d think that mandatory use of buyer-broker agreements would rid the industry of procuring cause actions, but as a managing broker, I still get calls from other managers saying their agent had a buyer agreement, that my agent stole them, and their agent is thinking of filing a procuring cause complaint.
Sure, there are unscrupulous listing or buyer agents who seduce a buyer away with the promise of a lower commission, or suddenly a buyer “remembers” their aunt is a real estate agent and has her submit the offer.
But the buyer is the one who breached the contract.
Even when an agent asks a buyer if they’ve signed an exclusive agreement with another agent, a lot of buyers answer, “I don’t know.”
They don’t know? Either the buyer was daydreaming of turning a third bedroom into a découpage studio, or the agent was daydreaming of using the commission to turn their own third bedroom into a découpage studio.
Still, many buyers and agents view the buyer-broker agreement as “just something we have to sign because of the NAR settlement.”
If every buyer’s agent took the client’s hands in theirs, stared into their eyes and said, “We’re exclusive; you can’t work with another agent for three months,” some buyers are still going to “step out” on their agent. The new agent isn’t the person who wronged the original agent; the buyer is.
Think of it like a bad divorce, and substitute “cheating spouse” with “cheating buyer.” The spurned husband doesn’t sue the pool guy (or gal); they sue the cheating spouse because the spouse is the one who signed and broke the agreement. (Bonus: At least the husband finally understands why they had the cleanest pool in the neighborhood!)
Time to go
Perhaps procuring cause served a purpose when cooperating commissions were still coupled with listings, but that time has passed, and it’s now time for NAR to take it off the books.
Buyer’s agents: It’s time to get better at articulating your value, explaining why you deserve the compensation you are asking for, and explaining the conditions of the buyer-broker agreement to the same degree you do with a listing.
Buyers: It’s time you understand you’re entering into an exclusive agreement creating a partnership with your agent to work together to get you a home. Oh, and you can’t just “break the contract,” the same way you can’t just break your cell phone contract.
Brokers: It’s time to have your agents’ backs by actively pursuing breached buyer-broker agreements the way you do with listings.
NAR: It’s time to stop giving out the participation trophy of procuring cause; the agents who get the deals across the goal line shouldn’t be penalized because a buyer cheated on their agent. In the post-settlement world, it’s time to dump procuring cause.
Spencer Krull is a managing broker with Side and works as a real estate expert witness and consultant for attorneys. Connect with Spencer on LinkedIn and Instagram.
