Recognition of Factors Determining Procuring Cause Can Assist in Obtaining Commission

Q: I am a new agent and I want to guard against spending a lot of time representing a buyer and then learning that I may not be entitled to receive a commission because I am not considered the procuring cause of the successful transaction. What should I be aware of in order to maximize my chances of recovering a commission when I represent the buyer?

What recourse does a real estate agent have for procuring cause?A: An issue that can arise between brokers and agents, and even lead to an arbitration, is a dispute regarding who is the procuring cause of a sale transaction and therefore entitled to the commission as the selling broker (i.e., representing the buyer). The California Model MLS rules provide that in filing a property with the MLS, the broker participant makes a blanket unilateral contractual offer of compensation to the other MLS broker participants for their services in selling the property. The rules provide that the broker’s contractual offer is accepted by the selling broker who procures a buyer that ultimately results in the creation of a sales or lease contract.

Therefore, by including the listing in the MLS, the listing broker (i.e., representing the seller) makes a unilateral contractual offer of compensation that is accepted by any selling broker that procures a buyer that results in a sales or lease contract. Although this is a relatively simple contractual arrangement, the difficulty arises when more than one broker participates with a buyer who presents an offer that is accepted by the seller. The dispute may arise when more than one broker contends that he/she was the procuring cause of the sale transaction and is entitled to the selling broker’s share of the commission. If the dispute is not resolved by the brokers, it can lead to an arbitration, the outcome of which is determined by the arbitrators’ consideration of various factors. Read more Recognition of Factors Determining Procuring Cause Can Assist in Obtaining Commission