In the world of real estate, procuring cause is a critical concept that determines which real estate agent is entitled to the commission in a transaction. It refers to the agent’s efforts and actions that ultimately lead to the successful sale or lease of a property. In this blog post, we will explore the concept of procuring cause, its importance in real estate transactions, and how it impacts agents and clients.
Defining Procuring Cause:
Procuring cause is the set of actions and efforts undertaken by a real estate agent that initiates an uninterrupted chain of events, ultimately resulting in a successful real estate transaction. It establishes the agent’s role as the primary cause of the transaction, and therefore, the entitlement to the commission.
Factors Determining Procuring Cause:
Several factors are considered when determining procuring cause in a real estate transaction:
a. Introduction: The agent who initially introduces the buyer or seller to the property is typically given preference as the procuring cause. This could occur through a phone call, email, an open house visit, or any other form of communication.
b. Continuity of Service: The agent who maintains continuous and ongoing involvement with the client throughout the transaction process is more likely to be considered the procuring cause. Regular communication, providing market information, and offering guidance are factors that contribute to the continuity of service.
c. Buyer/Seller Relationship: The nature and depth of the relationship between the agent and the buyer or seller play a role in determining procuring cause. If the agent has an established relationship and has been actively working with the client, it strengthens their claim as the procuring cause.
d. Substantial Effort: The agent’s level of effort and the value they bring to the transaction are also considered. Factors such as property showings, negotiations, preparation of offers, and marketing efforts contribute to the determination of procuring cause.
Importance of Procuring Cause:
Procuring cause is vital for maintaining fairness and accountability in real estate transactions. It ensures that the agent who invests time, effort, and resources in assisting the client is rightfully compensated for their services. Understanding procuring cause helps agents and clients navigate potential disputes and provides clarity regarding commission entitlement.
Implications for Agents and Clients:
a. Agents: Real estate agents must be diligent in documenting their interactions and maintaining a record of their involvement with clients. Keeping detailed notes, emails, and transaction-related documents can provide evidence of their efforts in establishing procuring cause. Agents should communicate clearly with clients about their role and expectations to avoid misunderstandings.
b. Clients: Buyers and sellers should be aware of the concept of procuring cause and understand the implications it may have on their transaction. It is important for clients to communicate openly and honestly with their agents, ensuring they are clear about the roles and responsibilities of each party involved.
Resolving Procuring Cause Disputes:
In some cases, disputes may arise regarding procuring cause, especially when multiple agents claim to be the primary cause of the transaction. Resolving such disputes often involves mediation, arbitration, or legal proceedings. Real estate professionals can minimize the likelihood of disputes by adhering to ethical guidelines, maintaining clear records of client interactions, and engaging in open communication.
Procuring cause is a crucial concept in real estate that determines the entitlement to a commission in a transaction. It recognizes the agent’s efforts and contributions in facilitating a successful sale or lease. Understanding procuring cause benefits both agents and clients by promoting transparency, accountability, and fair compensation within the real estate industry.