Procuring Cause Disputes
Ok, you guys, so I’m going to touch on a very hot topic that’s happening right now in real estate and the number one, I would say, complaint that we’re seeing at the board level and one that goes to arbitration is the who gets the commission. OK, so if you have a deal and you’ve worked hard with the client and then all of a sudden they did you and they go with another agent and that agent gets the commission, did he earn it?
I don’t know, this becomes a very kind of you know, sometimes it’s a subjective situation.
So the topic is who is the procuring cause of the deal?
And, you know, in our defines, the procuring cause as the uninterrupted series of casual events which results in the successful transaction.
So what I’m hearing is you need to make sure that when you have a client, that you create the agency agreement and establish that. So it’s very important that you get your buyer rep agreement signed. OK, and what you have to do is you have to see it through to the end. So once you’ve got your client and you’ve secured them, it’s not over. You have to see it through closing. OK, and what’s happening is and I think we’ve seen it before, you have you know, we talked about this yesterday.
When you have someone that just comes in and put your name on a contract. With a builder, and then they’re going to just to get a you know, maybe a rebate or a discount, something like that, where they really the procuring cause of that sale? I don’t think so.
So this is something that, you know, how this this goes about is this is always handled at the association level. So when someone files this complaint of procuring cause and it’s a dispute over over the commissions, it goes to a grievance committee and they ask these particular questions.
And, you know, they are very you know, they want to identify the series of events and ask these questions to determine if it goes to the next level. If so, it goes to the professional standards and then it goes to the board and it’ll go to arbitration. So, you know, we’re hearing more and more of these cases that used to be the number one complaint that we would hear had something to do with property management on the truck level. Well, this is a huge issue that we’re seeing more and more of.
So to protect your commission, what you need to make sure that you do is you need to notate and keep notes of everything that goes on along the way.
Ok, so there’s never any question. You know, Stacy and I always talk about we always look at it at a deal as if, say, you’re going to go to court and you don’t want to always think negative, but you always want to be proactive and think along those lines. So you’re protecting yourself and the brokerage along the way. So we avoid any issues that could come up later because, you know, in the beginning, it’s it’s like it’s like dating. Everything’s all great. And then you you know, you get past the honeymoon phase and you’re in the contract portion and everything goes great. And then every so often something comes in and blindside you and you have an issue to overcome. Most of the time we work them out and we get through it.
But sometimes those conflicts can really cause a problem. And if you have a problem with your client and they want to fire you and then they hire another person to pick up and close the deal where they are procuring, cause, you know, so, you know, this protects you.
This protects you from allowing things like that to happen. And, you know, what we want to do is just make sure so it’s not just introducing you to the seller and your you’re done or it’s not just because I wrote a contract. It’s not one particular thing. It is a chain of events. So you have to show that you have worked diligently. You you have seen it through and you’ve got to the closing table.
Ok, so please remember that.
And, you know, I I’m going to brag on Linda for a minute because Linda does such a great job at making notes in her and in Zoho and documenting everything that goes on along the way. And this will be so helpful if something like this were to occur. Shonna, on the other hand, it’s not that great at her documenting everything. But, you know, there’s there’s ways that we do a lot of text messaging now on our phones. There’s a way that you can take those text messages and and send them in and have them attached to the to the the transaction. So please make sure that you’re doing everything along the way and you know, you’re seeing it through to the end. So I don’t want to get off on that too much. We could spend a whole probably four hours on this topic, but I just wanted to bring it up just so it reminds you guys that things can happen and, you know, you want to protect yourselves. You guys work so hard and you don’t want something to happen like that where all of a sudden, wait a minute, I’ve done all of this work and then now I’m not going to get paid. You know, I had something happen a couple of years ago where, you know, we had a client call in and they wanted help.
They realized after they found they identified the builder and actually they were about to to enter into a contract that they really wanted a realtor to look over the contract and protect them.
So we came in. It was me came in kind of after the fact. And the builder was great. She went ahead and added me on, which not all builders will do that. And we got along the way. And all of a sudden the sun. The sun. Came in and had a realtor that they found out was going to give the money back. At the end of the transaction, so he the the buyer told the builder and sent me an email and the builder and said, you know what, we no longer need Shawna’s representation. What? She didn’t find a home. She hasn’t helped us. She just came in and and talked to the builder one time. She really hasn’t done anything. I want to take her off. And that was kind of a situation, right?
I let that go because it really had not invested a lot in it. But you can see if if I had if I had identified the home, brought them there, doing all of these things, and then that happened. That’s not grounds they can’t do that. And you are still entitled to your money. So there’s a lot of protections for you in there. But you also have to be diligent in in, you know, making sure that you have no interrupted series of interruption during this series of event of this transaction. Ok, if you have any questions on that, let me know. But yeah, here and more and more about that. So we want to protect our money. Guys work so hard for it.