January 7th, 2019 at 11:31 am
Agents should always be careful to avoid procuring cause disputes. A procuring cause dispute typically involves 2 agents from different brokerages who both claim entitlement to compensation for procuring the buyer for a property listed in the Multiple Listing Service (MLS). If a dispute cannot be resolved, the other brokerage may file a commission claim against you through local board arbitration or C.A.R. Interboard Arbitration. The arbitration process is usually unpleasant and time-consuming.
Here are 5 helpful tips for avoiding procuring cause disputes:
- No Triggering Event: Contrary to popular belief, procuring cause is unlikely to be decided by one triggering event, e.g., who showed the property to the buyer, who wrote the offer that was accepted, or who is currently working with the buyer. An arbitration panel usually decides who gets the commission based on the totality of the circumstances, including about 25 different procuring cause factors (see link below).
- Market Driven: Procuring cause claims are usually more prevalent when the market is slow, because agents may have a greater need for the money and they may have more time on their hands to pursue a claim.
- Always Ask Buyers: Immediately ask any prospective buyer upfront whether he or she is working with another broker.
- Be Proactive: If you discover that your client has been working with someone else on the same transaction, inform your manager immediately. We must generally contact the other agent and/or that agent’s broker right away to try to resolve the issue. Failing to contact the other brokerage may result in you doing the work to close the transaction, yet ultimately losing the commission through MLS arbitration.
- Know the Guidelines: Stack the odds in your favor by familiarizing yourself with the 25 procuring cause factors set forth in C.A.R.’s Procuring Cause Guidelines (password-protected for C.A.R. members only).
Copyright© 2019 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of January 7, 2019. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.
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