Should a Home Buyer be Obligated to Use a Realtor® Who Represents the Seller?

Well, regardless of what may seem right, home buyers are losing
their right to choose buyer agency--at least at no additional
cost to them--hundreds of times, each and every day across this
nation, thanks to a concept known as Realtor® Procuring Cause.

To get a better idea of the problem, consider the information at
the following link: http://www.real-reform.org/pc.pdf .

The question I'm asking...in a little more augmented fashion, is
as follows: Should a home buyer--who has no awareness that she
is losing the ability to receive buyer agency services at no
additional cost--be obligated to use a Realtor® who has failed
to disclose the impending obligation...who has often failed to
fully disclose agency status...and who is most definitely obligated
to represent the best interests of the seller?

Whether you answer yes, or no, I would be interested in hearing
why...and what you would do, as a buyer, when faced with such a
situation. And, also, what you would do if you were a buyer's
agent faced with such a situation.

To truly understand what is at stake here, you really do need to
review the information at the link above.

Here are some additional facts about Realtor® Procuring Cause,
hereafter PC, and some routine home buying facts, too:

1) Realtor® PC should not be confused with the legal doctrine
of PC. Realtor® PC involves commission arbitrations that are
overseen by licensees who have a listing agent centric worldview
and a vested interest in maintaining the primacy of their PC
system.

2) Buyers, whether first time--or fiftieth--typically do not
know that PC exists, until after they have already been trapped.

3) Realtors®--the vast majority of whom do not take buyer agency
seriously--see their version of PC as being a birthright. They
figure that the buyers who are not available to them as a result
of another Realtor's® successful PC trap will be offset by the
other buyers whom they will, over the long run, successfully trap
in their own PC snares.

4) Sellers do not, normally, prepay licensees for real estate
services. The funds that are used to pay the licensees come
from the money that the BUYER brings to the closing table. As
such, a buyer should receive sufficient disclosures to enable
them to choose--before PC can become an issue--whether they want
to have the portion of the brokerage fee that goes to the licensee
who is bringing the buyer to go to the buyer's agent of their
choice or, instead, to utilize the agent representing the seller.

5) Absent the disclosures called for in paragraph four above,
a buyer who wants representation is likely to have to pay for
it as an extra expense, rather than it being merely part of
what is already being paid--again, out of funds the buyer brings
to the closing table--in brokerage fees. Therefore, the
non-disclosure of agency status and/or non-disclosure of PC
absolutely IS costing the buyer money, if they want representation.

6) The job of a seller's agent is to work toward getting the
seller the highest price at the best possible terms. The job
of a buyer's agent is to work toward getting the buyer the
lowest price at the best possible terms. So, with proper
agency disclosures, why would a buyer want to forego the services
of a qualified buyer agent?

This issue of undisclosed Realtor® Procuring Cause, among other
such unethical practices--most of which disadvantage buyers--has
caused me to file an antitrust suit to break the tie between my
Realtor® association and my local Multiple Listing Service. I'm
sick to death of being part of an organization that not only
treats buyers as second class citizens--truly, more like property
than citizens--that I'm actively looking for a way out, without
losing my access to the lifeblood of my business...the MLS.

Right now, that case is one step away from being heard before
the US Supreme Court, as we have filed our petition for cert
with SCOTUS. Any who are interested, can view that petition
at: http://www.real-reform.org/scotus_06-815.pdf and you are
also encouraged to forward that link to any entity that might
be interested in filing an amicus brief with the court.

I look forward to a spirited discussion of the Procuring Cause
issues that I've raised, and stand ready to provide any
additional information that might be helpful in fueling the
discussion. What I don't know about Procuring Cause--and there
is little that I don't know about the system--I can readily
obtain from other sources.

Finally...please make no mistake about it. This is not merely
a matter of internal Realtor® policies and procedures. These
are issues that are costing buyers both in terms of real money
and absolutely in terms of rights. Those are most certainly
issues over which buyers and buyer agents should definitely have
legal recourse.

--
Sincerely Yours,

Jay Reifert, Broker/Owner*****************Excel-Exclusive Buyer Agency
http://www.true-agent.com or http://www.buy-madison-real-estate.com
or mailto:true-...@true-agent.com

A seller can set his own terms of business. If he wants to solicit
offers through someone he trusts to represent his interests (one
example being someone he trusts to show others through his house), then
that is his privilege. This would perhaps be referred to as giving an
exclusive listing to a broker.

There is nothing to prevent you from employing your own your own agent
who represents your own interests, but your agent will have to do
business with the seller's Realtor.

David Ames

Also, don't ignore that the Realtor I HIRE incurs expenses in marketing
my home. What you seem to advocate is a system where I would somehow
be able to avoid paying that Realtor if a buyer is found outside of
that Realtor's, or MLS, listings (kind of like the way Travel Agents
get cheated out of commissions they earn by doing legwork for people
who then book the trip on their own).

Besides, most home buyers eventually become home sellers, so in the
end, everything evens out.

The problem is that when both buyer and seller use the same real estate
agent, the agent has a conflict of interest. His object will be to
close the sale (to collect a double commission) rather than to get the
best deal for his clients.

While it's legal, that kind of practice (representing both parties) may
be regulated. And with good reason.

Stu

Mr. Ames has not answered the question. This is a question of
buyer rights. I'm not the buyer, Mr. Ames. I am an exclusive
buyer agent...a full service real estate broker that only
represents home buyers. I am also a hostage Realtor® with an
antitrust case that is one step away from being heard by the US
Supreme Court...intended to set hostages like myself free.

( http://www.real-reform.org/scotus_06-815.pdf if anyone is
interested. That isn't the thrust of this message, though.)

I never speculated that a seller should not have the right to
representation. I'm asking whether a buyer has a corresponding
right and moreover, whether a buyer should be made aware when
they are about to have to pay extra in order to have representation,
because some agent--thanks to a non-disclosed process known as
Realtor® procuring cause--is going to lock them into using an
agent who represents the seller.

Let's use a commonplace example for around here. This is not
meant to say that there is a standard commission, but there
certainly are averages.

Seller lists a home with a fictional firm, Bigfoot Realty, at
six percent. Bigfoot then places the home on the multiple
listing service, MLS, and offers half of that to the firm that
brings the buyer to the table.

Buyer sees the Bigfoot sign in seller's yard and calls to find
out a little bit more about the property from someone at Bigfoot.
Larry Loser is manning the phones at Bigfoot, because someone
has to do it, and it's his turn. Larry works second shift at
some factory and makes one or two sales a year as a result of
having a license with Bigfoot.

Larry fields the call, senses an interested buyer and offers,
since the property is only a few blocks away, and the buyer is
sitting right out in front of it anyway, to come over and
unlock the property so that the buyer can take a quick look.
The buyer has the time to spare and figures he can make a quick
rule in/rule out decision, so agrees that he'll wait to take a
look with Larry.

Larry arrives, and without bothering to disclose anything about
who he represents or that this showing is about to tie the buyer
to him, takes the prospect in and shows him around. You see,
Larry knows the secret of procuring cause. Larry knows that, if
this buyer becomes interested in this home, that Larry is most
likely going to win any arbitration case over the buyer side of
the aforementioned fee, provided he keeps in touch.

Meanwhile, the buyer--who does not know about procuring cause
and who also does not know, at this point, about buyer agency--goes
home, thinking that he may have found the home he wants to purchase.

He then begins to research what his likely next steps will be,
and discovers the concept known as buyer agency. It sounds good
to him on the surface, so he makes the phone call to a firm that
only represents buyers.

Discovering that Larry is obligated to work toward getting the
seller the highest price at the best possible terms and liking
the idea that he could have someone from another firm who would
watch out for his best interests as a buyer, the buyer utters
those words that every buyer agent likes to hear, along with the
ones that we hate to hear: "Your service sounds perfect. I
think I'd like to hire you. In fact, I may even have found the
property that I want to buy."

This is where the buyer first gets educated about procuring
cause and the theft that Larry perpetrated on him. The
buyer agent explains that he could end up doing all of the
meaningful work, take on all the liability, get paid and then
receive a notice to arbitrate where he would likely be
stripped of his fee for representing the buyer. This is
when the buyer realizes that a theft has occurred.

Prior to meeting Larry at that property, a buyer who knew who
represented whom could have opted not to view that property
at that moment. A buyer who knew about procuring cause could
also have opted not to view the property at that moment.

In either case, the obligation would have been avoided, and the
buyer could have chosen to obtain representation that would
not have caused them to have to come DIRECTLY out of pocket to
pay their buyer's agent...something that any intelligent buyer
would agree is a better choice than being stuck with an agent
who is obligated to work toward getting the seller the highest
price at the best possible terms. (I say "directly" because
the buyer, as I will explain--again--farther down, always pays,
indirectly.)

At least when a buyer signs a buyer agency agreement, they KNOW
they've created an obligation. Not so with procuring cause.

A big part of the problem here is tradition. Tradition makes
sellers think they are the only ones paying the brokerage
fees. It is not so. Sellers don't ever prepay a COMMISSION.
Every commission is paid using what was the buyer's money,
mere seconds before the seller took possession of that money,
at closing.

All of this is due to lending tradition. Without this turning
into something a great deal longer, I can tell you that I always
reject the offered cooperative fee, and put my compensation
clause into the offer to purchase. Because of lending arcana,
I am paid from the seller side of the HUD, on behalf of my buyer,
the person with whom I have contracted to be paid.

I do this to make it more obvious that I'm not beholden to the
seller or the listing agent. Regardless of whether I did it,
or not, the buyer ALWAYS pays. No buyer's money, no transaction.
In fairness...no seller's home, no transaction. Shouldn't each,
though, have a shot at having their own agent...not just the
seller?

It still, though, comes down to rights. Does the buyer, who
would benefit from having a buyer's agent over being stuck with
a seller's agent, have the right to know when they are going
to be obligated to use an agent, thus allowing them to avoid
creating that obligation? Unless you think that buyers are the
property of sellers and seller beholden licensees, there really
is only one proper answer.

I'm really looking forward to the first answer from an attorney
who gets this problem. I would say there is a great little
cottage industry here, just waiting to be discovered. One that
does hinge on a denial of rights, with damages that would not
be very hard to ascertain, or prove. The buyer side commission
would certainly be an ill-gotten gain.

The example I gave above is just one of many scenarios that can
result in theft of buyer rights by procuring cause. Open Houses
represent another scenario. Truth is, though, it doesn't matter
what triggers the theft. What matters is the non-disclosure and
total lack of opportunity for the buyer to escape the trap
before it can be sprung.

Here, as a reminder, is a link that can better explain the
procuring cause trap: http://www.real-reform.org/pc.pdf .

You can also gather other information about procuring cause by
Googling the concept. Be sure to put the word realtor in there
somewhere, as there is also a legal doctrine of procuring cause,
which bears little in common with the abusive Realtor® concept.

Jay Reifert
Madison, Wisconsin (detailed signature below)

PS: I have no intention of making Mr. Ames, or anyone else,
look bad over this issue. The vast, vast majority of people
have no idea that Realtor® Procuring Cause exists, or how it
can abuse buyers and buyer agents. That is what I am trying
to address. The need for it to be disclosed, so that buyers
can make intelligent decisions and protect their interests.

Stan,

If you are going to sue someone, are you the only one entitled to
representation? The buyer/seller relationship in home buying is
adversarial, too.

Seller wants highest price at the terms that are best for that
particular seller. Buyer wants the lowest price, at the terms
that are best for that particular buyer. That is an adversarial
relationship.

Adversarial, though, does not have to mean hostile, in a real
estate setting.

Your entire argument is based on your worldview, with no care or
consideration for that of the other party in the transaction...the
buyer.

You are certainly entitled to the best representatives that you
can find. So is the buyer. The system, however, is stacked
against the buyer. I would refer all readers to the information
that has already been presented, by me, farther up this thread.

I disagree with every observation you have made, including your
assertion of what you think I am advocating, with regards to
the payment of your licensee. There are two sides to the fee
in question. Listing side and buyer side.

Your agent is absolutely entitled to the listing side, once your
property is sold. It is the buyer side of which we are speaking,
and the buyer's ability to avoid losing the right to have someone
in their corner, at no additional cost to them, for all the reasons
I have already stated.

Realtor® Procuring Cause robs them of that right, without any
foreknowledge that the theft is about to occur. Theft also occurs
when buyers are not mirandized regarding who represents whom,
another common abuse perpetrated in the name of making the sale,
again at the expense of what is best for the buyer.

http://www.real-reform.org/pc.pdf

You have certainly posted a great example of the seller centric
worldview that predominates in the world of real estate. When
you are the buyer, I suspect you will have enough wisdom to sing
another tune, especially as you know about procuring cause. If
not, that is your right. I'm just seeking to ensure that others
know about it in time to make their own informed, intelligent
decisions.

Jay Reifert
Madison, Wisconsin (signature below)

The question is: "Should a Home Buyer be Obligated to Use a Realtor Who
Represents the Seller?
The answeer is that the buyer is not obligated to USE the seller's
Realtor. However, the buyer is obligated to transact business through
the seller's Realtor if the seller so specifies. The buyer may USE his
own agent (Realtor, attorney, broker) to transact business with the
seller's agent. If the seller and the buyer have conflicting terms of
business, then there can be no transaction. One or the other must give
way in order to effect the sale.

Sorry if this was not the answer you wanted, but it was a direct,
on-point response to the question as stated.

David Ames

> adversarial, too...

The point you raised in your original posting was answered by at least
two people.

Clearly you're on some sort of quest, which means your original posting
and rebuttals are based more on emotion than on an even-handed analysis
of the facts.

If I sue someone, I may hire a lawyer who works on a contingency fee.
Thus he only gets paid if I get paid (i.e. win the lawsuit.) Does that,
in any way, prohibit you from hiring a lawyer to represent your side? Of
course not. Does that mean if you lose the case and have to pay me (and
thus my lawyer) that you somehow don't have to pay your lawyer or aren't
obligated to pay him? Of course not (unless you managed to get one to
agree that you'd only pay if you win the defense.)

But yet that's what you're claiming is wrong here when you say that the
seller's agent is paid by the buyer and not the seller. The agent IS
paid BY the seller out of his/her profits from the sale, even if such a
payment is contingent upon the sale.

You don't lose the right to have someone on your side as the buyer. But
you don't have a right to have that someone be there at the expense of
the seller. If you want YOUR agent on YOUR side then you pay YOUR agent,
just as you'd pay YOUR lawyer in a lawsuit.

Just because people are stupid at times and think that the agent is
looking out for them even though the seller hired the agent, the seller
pays the agent upon sale of the house, the agents commission is based on
the sale amount of the house and thus the agent gets more if the house
sells for more, that doesn't mean they're being illegally robbed of any
rights.

Yes, the buyer has the same rights as the seller. He can refuse to
deal with the seller's agent and insist on using his own agent. Of
course, this may result in no deal, if the buyer won't deal with the
seller's agent and the seller won't deal with the buyer's agent, but
that's the way it goes.

I can list my car for sale in the newspaper, and say "you must show up
wearing lederhosen and an aloha shirt." If nobody wants to comply
with my terms, my car will just sit there. Same with an exclusive
realty listing where the seller's agent won't cooperate with other
agents -- if nobody wants to deal on those terms, the house won't
sell. Or if 10% of the potential buyers want to use their own
agents, then the seller will get fewer offers and, most likely, sell
for a lower price than he might have gotten with "broker coooperation".

Happens with FSBOs, too. Most sellers will cooperate with an agent
who brings a buyer, paying the buyer's agent 1/2 the usual fee. But
if the seller won't pay a fee for finding a buyer, then he'll get
fewer visitors and most likely a lower selling price.

>represents home buyers. I am also a hostage Realtor(R) with an

You use a loaded term, but you are *not* a hostage. You are simply
somebody who wants to break into an existing market -- one that works
quite well for most people, thank you -- but wants to change the way
that market works so he will get a better deal.

[OP objects to the "procuring clause" in real estate sales contracts.
This clause says that the agent brings _first_ brings a buyer to the
property will get (usually) half the fee.

OP cites a hypothetical case of a buyer who asks to see a property, is
shown it by an agent in the seller's broker's office, *then* decides
to look for a buyer's agent. But the buyer's agent may not be able to
get compensation via the usual route -- half the commission -- because
somebody else brought the buyer in first.]

I'll snip the rest of your posting. You use loaded words --
"hostage", "theft". But what you're really saying is that you want
the system changed to give you (and other buyer's agents) a bigger
share of the market.

I'm not a lawyer, and I haven't read your case filings. But based on
what I read here, I don't think much of your chances. First of all
there's your misuse of terms, which will _not_ impress the courts at
any level -- trial, state appellate, state supreme court, Federal
District Court, US Circuit Court, US Supreme Court. Then there's the
fact that you can't even spell "procuring clause" (note the "l")
correctly.

You need some legal grounds to win a court case, not just the fact
that you think "the system" is "unfair" to you.

Instead of spending your time on filing legal papers that you don't
understand, I'd suggest you do some advertising. Make buyers aware
that they need to hire a buyer's agent _before_ they set out to look
at houses. Then you will be the one who does the work of finding the
buyer and bringing him see the property, and it will be _your_ name
attached to the buyer on the register of prospects that the selling
agent keeps at the house.

If you want to be paid out of the commission that the seller pays, you
need to do _all_ the work that is traditional for getting half that
commission: not just advise the buyer and negotiate on his behalf, but
also find and bring the buyer in the first place.

Or you can negotiate for the buyer to pay you a "fee for service" for
negotiating the lowest possible price and giving good advice (like
including an inspection contingency in the offer). You can _even_
specify in the offer letter that the seller will pay that fee. Your
offer may not be accepted, of course, but that's true of any term in
an offer to buy -- the seller is free to accept, reject, counter-
offer, negotiate something in between, or stand on his head and juggle
swords.
--
I pledge allegiance to the Constitution of the United States of America, and
to the republic which it established, one nation from many peoples, promising
liberty and justice for all.
Feel free to use the above variant pledge in your own postings.

While I generally agree with a lot of the points Barry is making on
this thread (snipped), here I do think OP meant "cause", not "clause."

OP is referring not to a paragraph (called a "clause" because, when
written by lawyers, a single sentence can continue for pages and pages
over multiple numbered paragraphs separated by semicolons and
conjunctions, each paragraph of which is a separate coordinate or
subordinate clause in the grammatical sense within this massive
sentence) in the contract between homebuyer and seller, but to a
definition, contained in internal "Realtor"(R) documents, of a jargon
term of art, defining which broker is considered the "procuring cause"
of a sale.

The agent who first connects buyer with property is considered the
"procuring cause" of that sale (if one occurs) even if some other agent
is the one who actually closes the deal by all the hard work of
negotiating and getting the buyer and seller to agree to terms. In
other words, the first agent is the one who "causes" the sale to happen
by setting in motion the process of bringing buyer and seller together,
that is, by "procuring" (initially bringing in) the buyer.

Whether the broker or agent who is factually determined to have been
the "procuring cause" of a particular sale deserves to have a certain
share of the broker's fee awarded to him vis-a-vis other brokers or
agents who actually did more work is a policy question that is
certainly debatable in the abstract but which has already been pretty
much settled in practice by industry custom. What OP wants to do is
change that custom to be more favorable to "buyer's agents" such as
himself and give less of a cut to the guy or gal who does nothing but
bring in a hot prospect who eventually (after much work) turns into a
willing buyer.

I don't know what jargon the sales biz has for these different
job/personality types, but in the law biz we refer to the types of
lawyers who deserve a cut of client fees from the partnership pie as
either "finders", "minders" or "grinders."

The "finders" are the rainmakers who bring in new clients.

The "minders" are the ones who communicate with the clients about what
is going on in their case, answer their phone calls, hold their hand,
blow their noses if they need it, write periodic report letters
advising the client, whatever else needs to be done to maintain a good
client relationship.

And the "grinders" are the ones who burn midnight oil doing reseach in
the law library or thumbing through deeds and wills in the Hall of
Records or wearing out their gumshoes tracking down witnesses, and
drafting all the contracts, pleadings, motions, briefs, etc. and
everything else it takes to actually win (in litigation) or put
together a favorable deal (in business law).

Personally, I'm mostly a "grinder". But I have no problem with
sharing the largesse with those "finders" and "minders" who get clients
to ring my phone and ask me to put their case into suit and run
interference for me with clients even if the time and effort they
actually spend on a case is much less than I do, since I know I
couldn't earn a penny unless those clients kept coming in. So the
rainmakers earn it, even if it seems that all they do is play golf all
day with their CEO buddies from Amalgamated Widget and General
Whatchamajig.

--
This posting is for discussion purposes, not professional advice.
Anything you post on this Newsgroup is public information.
I am not your lawyer, and you are not my client in any specific legal
matter.
For confidential professional advice, consult your own lawyer in a
private communication.
Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
10440 Little Patuxent Pkwy #300
Columbia, MD 21044
(tel) 410-740-5685 (fax) 410-740-4300

Not necessarily. Perhaps Jay's "quest" followed from an "even-handed
analysis" that led him to conclude that the existing system is in need
of reform.

The rebuttals by David Ames and Stan have failed to address Jay's main
point. Nobody disagrees with the fact that the buyer (or the buyer's
agent) must work with the seller's Realtor if the seller has so
required. The issue is what disclosures the seller's Realtor should
have to make _before_ forming a representation relationship with an
interested buyer and _before_ triggering Procuring Cause.

Also, addressing Stan's concern, nobody is advocating a system wherein
the buyer and seller should be able to cut the seller's Realtor out of
the deal. By contract between seller and seller's Realtor, the
seller's Realtor is (reasonably) entitled to a commission (for his
marketing efforts, among other things), even if a buyer claims to have
found the house withOUT any help from the seller's Realtor (which would
be highly unlikely anyway).

I happen to agree with Jay's argument. It is, in the current system,
far too easy for a prospective buyer to unwittingly give up his right
to a buyer's agent, who would represent his interests better than would
an agent working for the listing company.

Here are two actual situations that recently happened to me, each of
which shows just how easily the current system allows a prospective
buyer to lose the right to representation in the purchase of a
property.

Background: A few weeks ago, I was looking to buy a house, but had not
yet selected a buyer's agent. (I planned either to use a discount
Realtor, which I had not yet found, or to buy directly through the
listing agent and negotiate a refund of part of the listing agent's
double commission.) Being aware of the "Procuring Cause" issue
explained by Jay, and thus not wanting to create any agency
relationship, I insisted on dealing only with the listing agent of any
house I visited, and I always explained to the listing agent that I
wanted _not_ to be represented.

Case #1: I found a house for sale by searching online. I called the
listing agent and asked for a tour of the house (being careful to
explain that I did not have or want an agent to represent me). The
listing agent said, "I'm leaving this afternoon to go out of town for a
few days, but I can have an associate show you the house." While the
associate was showing me the house, I reiterated to her what I had
already told the listing agent, just to be completely clear. At that
point she stopped and told me that because she had let me in the door,
she already was the Procuring Cause if I ever bought the house. She
stated that if I tried to buy the house with any other agent, or with
no agent at all, that she would enforce her right to get the
commission. She furthermore informed me that the listing agent was not
out of town at all, and that he had merely referred me to her "to avoid
a conflict of interest". (So, one of them was not speaking the truth.)
Now, I'm stuck with that agent, who works for the listing company, if
I ever want to buy the house.

Case #2. A couple of days later, I found another house for sale by
searching online. I called the listing company, identified myself as a
prospective buyer, and asked to speak with the listing agent. The
woman who answered the phone said, "Yes, I'd be happy to help you."
Thinking she was the listing agent, but wanting to be absolutely clear,
I explained to her that the reason I insisted on working with the
listing agent was that I did not have or want an agent to represent me.
She said, "Yes, I'd be glad to show you the property." Believing that
she was the listing agent (which, I admit in retrospect, was foolish),
I asked her to show me the property. After showing me the property,
she mentioned that she'd leave her business card on the counter for the
listing agent. Surprised, I told her that I had thought she was the
listing agent. She stated that she was not. I re-explained that I did
not want an agent, at which point she tried to reassure me that she
would represent my interests in spite of the fact that she worked for
the listing company. When I insisted that I did not want an agent (as
I had said from the very beginning), she became angry and complained
that I had wasted her time. Further, she said that since she had
already showed me the house, I couldn't use another agent.

As you can see from these cases, it is easy for prospective buyers,
most of whom don't (and shouldn't need to) know about Procuring Cause,
to become trapped into being represented by agents who work for listing
companies. I don't think it would be unreasonable for a law (or the
code of ethics of the National Association of Realtors) to require that
a Realtor working for the listing company disclose to prospective
buyers, in writing, before Procuring Cause is formed, that:
- I work for the listing company.
- By showing you this property, I will irrevocably become your
representative for the purchase of this property, which entitles me
alone to receive the buyer's agent's portion of the commission
specified in the property's listing agreement.

At least this way, any intelligent prospective buyer would realize that
they're not gaining anything, and are losing a lot, by seeing the
property with a Realtor working for the listing company. Furthermore,
such a mandatory signed disclosure would eliminate a lot of Procuring
Cause disputes.

As a separate issue (and I realize I'm not going to win any points with
Jay on this), I think prospective home buyers should not assume that a
"buyer's" agent represents the buyer's interests. In fact, there are
several reasons why the interests of a "buyer's" agent (working on the
conventional 3% commission) are *opposed* to those of the buyer. But,
since that's off topic, I won't go into it here.

> point. ... The issue is what disclosures the seller's Realtor should

That is certainly an issue worthy of serious discussion and I am not
taking sides on it, but i'm not sure that was actually Jay's real main
point. As I understand Jay's post, his lawsuit that is pending cert
with SCOTUS claims that the PC system itself is an antitrust violation
because of its anticompetitive effect against buyer's agents, and he
wants to do away entirely with the requirement that PC alone be used as
the basis for determining which agent gets the credit (and the
commission) for bringing in the buyer, relying instead on some kind of
multi-factor analysis instead of a bright-line rule of first come,
first served. Under Jay's proposal IIUC, a court or arbitrator would
look at the whole situation to see which agent deserved to get what
percentage of the fee based on the ultimate value of their work, the
risk involved, the amount of time they put in, etc. IIUC Jay feels
that such an analysis would give the true "buyer's agent" a more even
chance of getting his fair share of the stake.

OTOH if Jay is happy with the current PC system but just wants the
courts to mandate that all brokers and agents "Mirandize" their
prospects before showing them a house for the first time, I completely
missed the boat. But as a practical matter I'm not sure how much good
that would do for Jay's (and other buyer's brokers') business, since
who listens that closely or understands all that jargon anyway?
Obviously, criminal defendants don't pay much attention when they get
real Miranda warnings since lots of them go ahead and give
incriminating statements even after being warned.

Perhaps the main upshot of a Miranda-like requirement would be that
through publicity, virtually all prospective buyers would learn about
the intricacies of PC and buyer agency as part of the general cultural
atmosphere before they even begin to think about entering the market to
buy a specific house, much the same as vitrtually everybody these days
who watches TV, not just criminals, already _know_ pretty well the
rights that are listed in the Miranda warnings, at least to the extent
of being able to parrot them back, even though.they may not think about
them carefully or realize all the implications.

Here's the part I don't understand, and maybe someone can enlighten me.
If I'm the kind of guy who carefully looks into things beforehand and
decides I really want a buyer's agent to represent me in my quest to
buy a home, I will go to find a buyer's agent FIRST and then let that
guy or gal do all the work for me of finding homes that meet my
criteria and showing them to me. In that case, the buyer's agent IS
indeed the PC and gets credit for such, right?

But if I'm an off-the-wall, impulse-buyer kind of guy, and I just
happen to be driving by (before I even know I'm in the market) and see
an agent's sign in front of a house that suddenlyt gets me thinking,
"Hey, maybe I would like to live there, let's look into it", and I look
at the house first and THEN decide I want to have a buyer's agent
represent me in the transaction, I am s till fully entitled to hire a
buyer's agent to represent my interests but that buyer's agent is NOT
entitled to get the PC share of the fee since he was not the one who
initially hooked me up with that house. Am I right so far?

If so, where's the beef? The guy who drives around looking at signs,
or who looks up listings himself on the internet before contacting any
agent, HAS ALREADY PLACED HIMSELF IN THE MARKET WITHOUT AN AGENT and
then wants to bring a buyer's agent in through the back door. Nothing
wrong with that, but isn't it backwards for him to then want his
buyer's-agent to get the credit for bringing him into the market in the
first place? Fair is fair, but that would be giving the buyer's agent
credit for something the buyer's agent in fact had nothing to do with.
Such an "impulse buyer" does indeed still have the right to be
represented by a buyer's agent, just as the guy who has already blurted
out an incriminating statement still has the right to be represented by
counsel if he then asks for one, but the horse is already out of the
barn and it doesn't do any good to latch the door behind him.

As long as the careful prospective buyer goes FIRST to a buyer's agent
who THEN takes the prospect around to show him properties, the PC
system seems to me to work just fine. But like I said, I have no
personal axe to grind and maybe a multi-factor analysis would in the
long run provide a more fair way to distribute the commission.

No, that was not the question...that was the title of the Subject
in this conversation thread. The question was much more indepth
than that, and I also provided a great deal of background information
to assist readers in better understanding the system that prompted
the asking of the question in the first place.

I won't restate the question that was asked, as that--and the
information necessary to understand the question--can be found
easily enough just by going to the fourth paragraph of the
originally posted message.

The seller knows he is signing a contract and is required to deal
with/through the agent/firm with whom he has signed the contract.

A buyer who goes to see a home with a seller's agent--or merely
goes to an open house--does not have any idea that procuring
cause may be creating an obligation to use a seller representing
licensee.

How are those rights the same? The seller knows an obligation
was created. The buyer has no such knowledge.

Even in cases where the licensee may have adequately disclosed
whom they represent, they virtually never tell the buyer that
seeing the home with them will keep the buyer from hiring a
buyer's agent, unless the buyer pays out of pocket to do so...all
because of the non-disclosure of procuring cause. There is
still no awareness of the creation of an obligation.

People, I have represented the interests of roughly four hundred
buyer clients in their pursuit of a home. I do not ever accept
compensation from a listing agency.

In all instances, I put a clause in the offer to purchase which
states, "Seller agrees to pay, on behalf of buyer, the buyer
agent's fee of "x" percent of the final sale price, at closing.
Excel-Exclusive Buyer Agency is serving as the exclusive agent
of the buyer and has no agency relationship with the seller
and/or any agent of the seller."

There are a great many legal and philosophical reasons I do this
and it would exceed the scope of this message series to get into
all of this.

The bottom line, though, is my client--the buyer--is the one who
is responsible for my fee. We do have to structure things in
a particular way, in order to get lending tradition/arcana to
allow for the payment of my fee, without it going through the
hands of the listing agency.

Regardless...my client--the buyer--is the one who has brought all
of the funds necessary to purchase this home to the closing table,
and has directed--via the offer--how I am to be paid. They are
controlling how a part of their borrowed funds are going to be
utilized. If the seller does not wish to agree--which has not yet
happened--we will not come to an agreement.

However, the listing brokerage has always reduced the amount they
charge the seller, by an amount that is equivalent to the fee
they had offered to whomever brought the buyer.

The problem arises, in that there are many, many, many situations
where buyers are out looking at homes BELIEVING THEY ARE FOOTLOOSE
AND FANCY FREE...AND THAT LOOKING AT HOMES DOES NOT CREATE ANY
KIND OF OBLIGATION FOR THEM.

THAT is not true.

Thanks to procuring cause, these buyers who have no reason to suspect
that a showing is more than a courtesy extended to them, are often
shackled to the licensee who made the showing, because any subsequent
licensee knows there is likely to be a losing commission battle, if
they do offer buyer agency services to that buyer.

I hear no less than ten prospective clients each year--and the number
is on an upward trend--tell me stories that reduce down to the
following type of situation: "I drove by a particular property, or
I saw an ad for a particular property and made a phone call to the
listing agency. A licensee volunteered to show it to me, and, since
I had the time, I went ahead and took a look. Well, this home might
be the one, so I then went ahead and began researching, on the
internet, next steps. Through my research, I discovered buyer agency
and then, knowing about buyer agency, I discovered you. Based on
everything you do, we want you to represent us."

That's when I educate them about procuring cause and what has just
happened to them. In all my years, there has only been one person
tell me that they knew about procuring cause, and the fact they
were creating an obligation before they went out to look at homes.

In all other cases, the buyer was stunned at the effect that a
secret realtor system had perpetrated on them. I told the one
who knew in advance that there was nothing I could, or would,
do for him, as he had the opportunity to keep from creating the
obligation and decided to go look anyway.

Are you honestly telling me the multitude of other buyers should
have to forego representation of their best interests, at no
additional charge to them, because they were TRAPPED?

> Barry Gold continues, in part:

Break into? Most licensees would KILL to do the dollar volume in
business that I do and, as I own my own company, I don't split my
fees with anyone else. Until the market took a turn for the worse
in 2006, my volume ran between four and eight million dollars
per year. (Even last year, I'm sure that I'm still doing better
than most licensees by the same margin as when things were much
busier.)

I most certainly am a hostage. I absolutely need the multiple
listing service, MLS in order to conduct my trade. In order to
get it, I have to agree to arbitrate in a rigged realtor system
that operates against my clients' and my own best interests, due
to the thieving concept known as procuring cause.

I'm not trying to break into anything. My success arises out
of the fact that I give buyers what they really want, the ability
to get a home with a professional home buyer who puts their
interests first. Someone who will work toward getting them the
lowest price at the best possible terms.

They are not loaded words. They are accurate descriptors of what
is happening to buyers and buyer agents across this nation. What
we want is for buyers to know that an obligation is about to be
created, before that obligation can foreclose any of their rights.

Now that's amusing. So, you want to tell me that the largest
reason for my desire to escape the requirement--that which holds
me hostage--that I HAVE TO be a realtor, is misspelled?

Well, besides the fact that I know that it is spelled correctly,
allow me to suggest that YOU could have kept from going down
this road just by Googling the concept.

I Googled it your way, and came up with 62 results. Then, my way
shows, oh, 65,000 results. Your search came up with information
placed out there by people who did not spell the concept correctly,
or who were dealing with another concept, known more correctly
as the override or extension clause. (And the latter was in the
minority.)

Another great example of problems endemic with procuring cause. I
do not EVER procure a buyer for a property. Never, ever, ever,
EVER! I procure property for my buyer. I am also paid by my
buyer, though it does require some hoop jumping to accomplish that,
because of the antiquated lending system that is not capable of
directly allowing my client to finance my fee.

We have to use methods like the one I set toward the beginning of
this posting.

As I've already mentioned, I know what I'm doing. I've served right
around four hundred clients and know very well how to protect myself,
absent being hobbled in those instances involving procuring cause.

Here are some other things I'm sure you don't know. When buyer agency
first came about, buyer agents could not be forced to arbitrate by
NAR. They had to change the Code of Ethics to make it so buyer agents
would be required to arbitrate.

Not only can we be forced to arbitrate if we take a cooperative fee
paid by the listing agency, but we can be forced to arbitrate if
the seller pays us or even if the buyer pays us directly. If the
listing brokerage reduces the fee that is due them by the seller,
as in the amount of what was offered as a coop fee, we can lose our
fee, even if we are paid directly by the buyer.

And if it isn't reduced, then the buyer is paying more for the
property than they would have if procuring cause had not been an
issue from the start.

Why should a buyer be disadvantaged by a concept they do not even
know exists? Why should a buyer's agent--whose service mandate
is entirely different than that of a seller's agent--be forced to
turn business away, because of the non-disclosure of a thieving
concept like PC?

Buyer rights are being stolen and buyer agent business is being
restrained, as a result of the non-disclosure of procuring cause.

--
Sincerely Yours,

(800)928-9379, Toll Free * (608)273-8841, Office * (608)273-8388, Fax

Yes, absolutely. It is procuring cause, not cLause. Mike's post
bears rereading, as he has gotten much of this right.

Realtor® procuring cause, as a concept, is actually pretty easy
to define, but is often misapplied by panels that hear the
cases that come before it...at least when applying it to cases
involving buyer agents.

Unlike cases that are heard in courts, the individuals who are
hearing Realtor PC cases have system, and practice, related biases
that impact on how they decide cases.

But, worse yet, FEAR OF THE SYSTEM keeps buyer agents from offering
services to buyers who need and want buyer agency services but
who, thanks to the non-disclosure of PC and its impact, cannot get
services from buyer agents without paying extra for them.

This is the cost of the deception and it is real, indeed.

In reality, it is impossible to state where the starting point may
be in a procuring cause case. It is arguable that receiving email
information via an autoresponder program could even be the starting
point in a procuring cause case, though I am not aware that this has
yet happened.

Mike's example, though, represents a common trigger for how a PC
case could arise, and I've offered up other examples, too.

What OP--me, original poster--wants to do, is make it so buyers know
this concept exists and how it impacts them. That way, they can do
the smart thing and investigate all their different options before
obligating themselves. Who knows, maybe they will decide that there
is some advantage to using the seller's agent, as opposed to having
someone on their side. If so, that's fine. The key, though, is they
were not trapped.

With disclosure, they will know--before ever triggering a procuring
cause event--that they will have no choice but to use the licensee
that is showing them a given home, if they wish to purchase that
given home.

As of today, they do not know.

As for finders, minders and grinders, that is an interesting breakdown,
but not relevant to what I'm advocating. My point is that no licensee
has a right to "find" a home for a buyer, if that locks the buyer into
using them without the buyer's knowledge.

Finding is a small part of the process. Had the buyer known of the
impending obligation, and come to me first, the property in question
would have been one of several that we would have seen together.

Moreover, I would not have attempted to sell my client any of the
homes we were seeing. This goes back to the fact that I don't
procure buyers for sellers. I procure properties for my buyer
clients. I am never the procuring cause of sale, because I don't
sell! The client will tell me which home they wish to pursue, if
any, and then I will help them do so, intelligently.

Maybe a problem with a lot of this is perception. Exclusive buyer
agents--of which there are maybe 2000, out of a Realtor® population
of better than 1.3 million nationwide--are not salespeople.

We are fiduciaries who watch out for the best interests of our
buyer clients. We don't sell houses. We help people buy.

--
Sincerely Yours,

100% Homebuyer Representation********5136 E. Hilltop Road
100% Of The Time****************************Madison, Wisconsin 53711
South Central Wisconsin's Oldest, Most
Successful, Exclusive Buyer Agency Firm

Nobody is obligated to use anybody.

I think it's quite reasonable that *using a service from somebody* can
obligate you with respect to that person and service.

If you go into a restaurant, ask for food and eat it, you're obligated
to pay for it, even if somehow you aren't aware that you've created
such an obligation by your acts.

Awareness is not relevant.

Did the buyer request and receive *services* from that Realtor? If
so, why shouldn't the receipt of those services create an obligation?

Seth

As is hopefully becoming obvious from what other posters have now
also said, no...my point has not been answered.

Yes. Yes...I'm on a quest. All you have to do is Google my name
and the words antitrust or my name and the words procuring cause
and you can easily tell that I'm on a quest. A quest for justice!

As for the emotion aspect...there is no doubt that I'm passionate
about this quest. However, passion does not reduce the validity
of my analysis or insights in these matters. I know that of which
I speak. I have battled the Realtors® since the early 1990's,
always seeking solutions that would benefit clients first.

I have watched Realtors® change laws across nearly half the states
in this nation, always doing so with an eye on enhancing a brokerage's
ability to double dip transactions, with less liability. That's
the motivating force behind the concepts of transaction brokerage,
facilitation, designated agency, appointed agency and any other
morph that reduced the client protections that were inherent under
the common law of agency.

Trust me...my happiest day will be realized, when some bland,
boring researcher--or the like--decides to chronicle what has
really been happening, as such a person is sure to arrive at
the same type of conclusions that I have been presenting with
passion.

You want to verify what procuring cause is, and how it impacts
on buyers? Go to http://www.real-reform.org/pc.pdf and read
the brochure. Then, go out and pretend to be a buyer. Follow
the suggestions in the form, and see what happens.

By the time you're done, you'll have no doubt procuring cause
exists, and that it is a method for stealing away a home buyer's
ability to have buyer representation at no additional cost.

--
Sincerely Yours,

> RealtorŽ procuring cause, as a concept, is actually pretty easy

Are you talking about the listing broker claiming to be the procuring
cause, and damanding the entire commission? Personally I think that is
unreasonable under any circumstances, if not unethical, unless he is
actually hired to represent the buyer after making full disclosure of
the dual agency.

Brief discloses very few cases on this point. A Mississippi case
indicates that such a dual agency would be unethical and implies that,
as a result, the double commission would not be due. Sudeen v.
Castleberry 794 So.2d 237 (Miss.App. 2001).

One Illinois case says that a broker who represents both sides without
full disclosure cannot require payment from either the buyer or the
seller. Edens View Realty v. Heritage Enterprises, 87 Ill. App.3d 480
(1980).

Another Illinois case approved of the double commission in a dual
agency procuring cause case, at least in part because the buyer and
seller were sophisticated real estate investors and they "must" have
known about and approved the dual agency. Cole v. Brundate, 36 Ill.
App.3d 782 (1976).

There may be others, but I don't have the time to look right now. The
bottom line is that normally a broker is not allowed to represent both
buyer and seller unless he makes full disclosure to both parties, and
gets both of their agreements.

If he fails to do that, I don't see how he could claim to be the
procuring cause and claim the entire commission, especially if the
buyer rejected that representation and brought in another broker to
represent him.

Stu

Knowledge is good. You can't force people to know something. You can
attempt to educate them. You can write consumer-protection articles
and (try to) get them published in newspapers and magazines. You can
take out advertising. You an lobby to have this issue covered in
ninth grade social studies classes.

There are any number of things that somebody thinks ought to be
required to be disclosed "for the protection of somebody else" (and,
only coincidentally, to the advantage of the person who wants to
require it). Which of those should be written into law?

Are you saying that someone doesn't have the right to provide a
service *requested by* someone else without making disclosures for
*your* benefit?

Would you like to be required to disclose to your customers that by
not using you, they have a better chance to negotiate a lower
commission rate?

The assumption there is that if the buyer had known of the impending
obligation, he would have come to you first.

Seth

Some days it can be hard to tell what my main point is, as I have
lived the life of an activist advocate for buyers since the early
nineties. The issue of disclosure is another one that is near and
dear to my heart, and the abuses that NAR has perpetrated upon
the common law of agency and the destruction of what it means to
be a fiduciary are other battles that I have long been fighting.

Any gluttons for punishment can go to http://www.real-reform.org ,
scroll to the bottom, click on the email archive and begin
reading.

Something that is crucial to understand, relative to what Matt
said in the first paragraph above, is that PC has absolutely
nothing to do with representation. A licensee could make all
required disclosures relative to whom s/he represents and still
will not bother to tell the buyer that an obligation, via PC,
is about to be created.

Absent that disclosure, the buyer likely thinks, ok...I get
that you don't represent me, so I have to watch what I'm
saying while I look at this home, because you represent the
seller. However, the agent still did not tell the buyer about
PC and the buyer's obligation to use that seller representing
licensee.

So, the buyer, who has no reason to think anything is happening
but a look at the property, has just been hit with a stamp that
says, PROPERTY OF PC THIEF. Granted, the stamp is in ink that
only other Realtors can see...but the stamp does what was intended,
and if the buyer then begins researching next steps and wants
a buyer's agent...well, that's too bad, as all other Realtors
see the stamp on the buyer's forehead and realize what the stamp
means. Only then is the buyer likely to learn about the stamp
on his/her forehead.

The suit is only one prong in the attack on PC...and PC itself is
never mentioned in the suit. The case is one about tying and
about non compete agreements.

Your observation about a way of making PC serve the purpose for
which it was intended is accurate. If the arbitrators who heard
the cases were not biased and followed the methods for establishing
PC in accordance with the LEGAL doctrine of PC...not the way it
is meted out in Realtor Kangaroo Court then no true buyer agent
would ever have to worry about the outcome of a PC case, as proving
estrangement would be as simple as showing that the buyer no
longer trusts the first agent...because the first agent trapped
them, putting the agent's interests above theirs leading to the
question of what is going to happen the next time that agent's
interests might be at odds with their interests as buyers.

Estrangement irrevocably breaks the chain of procuring cause. So,
yes, neutral arbitrators would be acceptable, if there was no
way to get rid of PC altogether. (It is also my understanding
that, under the legal doctrine of PC, it is much harder for the
first licensee to prove s/he is PC anyway, even without considering
estrangement.)

This is another prong of attack, unrelated to the lawsuit. I am
always trying to get the concept of PC publicized. Sooner or
later, whether it be by virtue of blogs, usenet or other internet
related outlets, the conventional press will pick up on this
concept and will find a way to tell the story.

Entities like the Consumer Federation of America, Consumer's
Union (Consumer Reports), AARP and others are already beginning
to gain familiarity with the concept of Procuring Cause, and
will hopefully someday offer warnings to their members about
what PC is and how it can affect them. (Even the FTC and the
USDOJ have been listening to what I, and others, have been
saying about PC.)

So, yes...I do favor mandatory disclosure of Procuring Cause,
so long as it also forcefully states something like, "Viewing
a home with a seller's licensee may leave you no alternative
but to buy the home through that licensee, which could end up
costing you, in spite of the fact that you have not signed
anything creating any apparent obligation. Be sure to investigate
your options before you go viewing homes."

Yes. However, as I mentioned in another post, even though all I
do is work for homebuyers, I am never the "procuring cause". I
do not procure buyers for sellers. All I do is procure property
for my buyers. I am not trying to sell ANY seller's home, but am
only helping my buyer intelligently buy the home they decide they
wish to purchase. That is always the way it works.

As a good friend of mine, Ray Wilson--author of Bought, Not
Sold--likes to say, buyer agents in an entirely different TRADE
than what listing agents and seller representing licensees are.
We're not selling homes, like they are. We're helping people
buy. And that isn't just some fancy marketing concept, it is
what we do. We help buyers buy.

You're right, but yet not right. What did that buyer know about
the process? Were they really out being impulsive, or were they
unaware that looking created an obligation? I can tell you, for
sure, it is the latter.

And the reason they don't know, is because NAR, through the state
realtor associations, controls the laws that are written...the
things licensees are taught...and the disclosure forms that are
placed before consumers.

Want an earopener? Listen to the words of Bill Malkasian, the
Executive Director of the Wisconsin Realtors Association:

http://www.real-reform.org/unchecked_power_1_.mp3

and

http://www.real-reform.org/unchecked_power_2.mp3

or read them at:

http://www.real-reform.org/unchecked_power_1.pdf

and

http://www.real-reform.org/unchecked_power_2.pdf

Consumers have no idea to what degree they are being controlled,
via disclosures that lead them away from the truth...and farther
into traps like procuring cause and designated agency.

Can't agree. Most buyers are smart enough to know that they shouldn't
be spilling their guts to the seller's agent. They are just there
to get a look at the home, and don't figure they have created any
kind of obligation. That's the key. Did they know the obligation
was being created? Did they know it was going to cost them more
money to see the home, as they learned when they were no longer
merely stuck with the propaganda realtor disclosures...and actually
saw, via non-realtor controlled research outlets that there were
better options for buying a home?

If they knew about the obligation, we have no problem. Any buyer
who knows about procuring cause and goes out looking at homes
gets exactly that for which s/he bargained. But that is not
the reality.

And I say you can't show me a careful prospective buyer, until the
information about buying a home actually reflects the realities
brought about by the existence of procuring cause.

I see no need for a multifactor analysis. For me, if the arbitration
system cannot be repaired, then the only factor that counts is this
one: Did the licensee who wishes to assert procuring cause against
another licensee mirandize the buyer, in writing, in advance of a PC
triggering event? If not, then no admittance to ProcuringCauseLand.
If so, then it is the buyer's own fault and they can live with the
obligation they have knowingly created. That's fair.

Maybe the warning would be something like this: "You have the right
to a buyer's agent, possibly at no additional cost to you. If you
go to see this home with me, you are giving up that right and will
have to use me, a representative working in the seller's best
interests to buy this home, and any other home I show you. If you
later choose to have a buyer's agent, it will be directly at your own
expense on these properties. Do you understand these rights as I
have explained them to you?

Not what I would consider final format...but you get the point. If
the buyer knows what will happen, before it happens, then they are
in a position to make their own decision about how to proceed. Absent
that, it is a trap, pure and simple. A trap that steals away the
buyer's right to representation at no additional cost to them. And
that's not fair.

--
Sincerely Yours,

Just because Larry showed them the property doesn't mean he was the
procuring cause. If he contributed, he's entitled to something. But
how much is reasonable in the scheme of things?

A similar (but far from identical) problem was resolved among personal
injury lawyers in California. A client is entitled to fire a lawyer at
any time for any reason. But when multiple lawyers start claiming
separate 33% fees, something had to be done. Now the client pays one
fee, which the lawyers divide based on the relative amount of work done
by each.

Perhaps a similar approach would work with buyers' agents.

Stu

The buyer is under no obligation to use an agent who represents the
seller. The contracts between the seller and the seller's broker --
and between the various brokers (e.g., MLS) and agents -- specify
who gets what piece of the sales commission.

What the procuring cause rule does is make sure that the agent who
first brings the buyer gets paid for that. Now it may be true, as in
the long example you cited, that the "procuring cause" agent has done
nothing except happen to be in the office when the phone rang. But it
may equally be true that said agent has been putting out "open house"
signs, advertising in the papers or by putting announcements up on
utility poles (technically illegal in many cities, but that's a
different problem), and otherwise attracting buyers. He may have
shown the buyer 5 or 6 other houses before finally bringing them to
the one that they chose. _You_ don't know, you merely AssUMe the set
of facts that makes your case look most sympathetic.

But the buyer is still under no obligation to use that agent. The
buyer can come to you, and pay you to represent him out of his own
pocket. Or you can write a sales offer that requires the seller to
pay you. That could put the buyer at a competitive disadvantage vs.
other potential buyers, depending on the current state of the market.
Or, again depending on the state of the market, the selling agent and
"procuring cause" agent might agree to split their fee with you to
allow the sale to go through -- after all, if there is no sale they
get nothing.

Let's assume a $500,000 house, at 6% commission. That's a total
commission of $30,000, half to the selling agent, half to the agent
who brings the buyer.

That will mean the buyer's offer is, $30,000 lower than it otherwise
would be, in terms of money in the seller's account. In a "hot" real
estate market (like Los Angeles in 1995-2005), the seller will choose
another buyer.

But when the market is cooling off (as it is now in LA), the seller is
going to have to decide whether to accept that offer, or wait for a
better one. If he rejects it, he may have to wait months for another
one -- or end up settling for an even lower offer. And when the
market is slow, the selling agent may decide to negotiate a 3-way
split, $20,000 to her, $20,000 to the procuring cause agent, and
$20,000 to you. Because $20,000 now is better than the _chance_ of
$30,000 later on. A bird in the hand...

The buyer is under no obligation. Only the seller.

[snip]

That sounds like a good clause, and I suspect most agents who
represent a buyer -- either exclusively or ad hoc -- put a similar
clause in their offer.

See above. The obligation is on the seller, not the buyer. The buyer
does not have any contractual relationship with the "procuring cause".

[snip]

Gee, too bad your buyer didn't do his web research _before_ looking at
the house. Then he would have known to get somebody like you
beforehand, and have _you_ show him the house.

This isn't a case of an obligation being created without consent, it's
a case of those who don't trouble to find out how the market works are
at a disadvantage. This is just as true in buying a car or a
wide-screen TV as in buying a house.

I'm constantly amazed at the people who go into what will be the 2 or
3 most expensive transactions in their life without doing a little
research first.

[snip]

More loaded terms.

I'm glad to read that you are highly successful. The fact remains
that you are trying to re-structure the market to your benefit and
that of your client.

OK, you were right about that and I was wrong. But the fact remains
that if you don't like how the sellers and their agents do business,
use your market power -- and that of other agents who represent buyers
-- to get it changed. Expecting the courts to do it for you, well,
the most I can say is, good luck.

Then do _your_ work and educate potential buyers.

I'm still just trying to understand this, not taking sides. But now
you've got me more confused than ever. Are you or are you not entitled
to the PC share of the seller's previously-agreed broker fee for
procuring the sale, if you (as a buyer's agent or otherwise) are the
first professional who brings the buyer and the property into contact
with each other? If not, does ANYBODY get that cut of the fee, or does
the seller's listing agent get the whole thing while you have to charge
your own buyer client an additional fee for your representation of him?
I thought that was the whole point of educating buyers about PC before
they took that first look, so that you could do your work for them
using the PC share of the seller's fee and thus do so at no additional
charge to the buyer.

Query: Even if a careful, thoughtful buyer nonetheless falls for this
PC "trap" as to a particular propety that he checked out while just
cruising by, before he was seriously in the market, and then later
learns of the existence of this effect when he tries to hire a buyer's
agent, the Loser Louie who first showed him Home A doesn't have any
claim on whatever fees might be due if the buyer's agent later on
assists his client in buying Home B, right? The PC "snare" attaches
only to the particular property? So all that means is that Prospective
Buyer can't buy _that_ property without shelling out the PC share to
Larry Loser? If as you say the main advantage of a buyer's agent is
that there usually are other properties for sale that better meet the
real needs of the buyer at a lower price, how much of a real problem is
this trap anyway? Couldn't the buyer, and his agent, once they've
hooked up, just thumb their noses at the system by selecting and buying
a _different_ house instead?

How many sales, statistically, result from the FIRST home a prospective
buyer looks at when he starts testing the market? Isn't it a lot more
common for a prospective buyer to look at, and reject, several
properties before finding one that really meets his needs, and making
an offer on it? Or at least to take a look at several comparable
properties in the area, on the same day or within a few days' time, to
make sure the one he is interested in is a fair deal in comparison? As
my dear wife is fond of saying, "No home (car, TV, Ginzu knife, etc.)
is ever the LAST good deal on the planet. Another one will come
along."

All I mean by multifactor analysis is that the decisionmaker
(arbitrator, court, whomever) would look at the whole circumstances of
the case to decide what share ratio is fair, rather than applying some
bright-line, zero-room-for-negotiation rule that automatically gives
50% of the seller's broker fee to whichever zhlub was lucky enough to
be the first person to show buyer the house in question. Is what
you're suggesting that no PC share should be issued at _all_ unless the
buyer knowingly agreed to pay it, by stepping across the threshold
after being duly warned of its legal effect? Really, doesn't the PC
system just provide an easy way by which the various agents working on
the SELLER's side can agree to 1divvy up their fee without
time-consuming and uncertain dispute resolution through arbitration or
suit? And if so, what should the buyer's agent care about it anyway,
unless his goal is to "game" the system to have the _sellers_
essentially pay him for the service he is providing to his client the
_buyer_ rather than having the buyer pay a separate, additional fee for
same?

The reason bright-line tests evolved in the law in the first place
(things like the Rules of the Road, Statutes of Limitation, etc.) is
that the transactional cost and uncertainty of arguing about certain
things -- such as which side of an oncoming vehicle you should pass by
-- is, in the long run, not a productive use of time and effort, even
though certain individual cases may come out on the short end of the
stick which might otherwise have had a perfectly good chance of success
if no such rule had been created.

OTOH even bright-line tests like "always drive on the right side of the
road" are not zero-tolerance in the sense that, if you come upon a
place where a landslide has blocked your lane, you do not need to sit
in your car and wait a few days or weeks (ordering takeout by
helicopter, I presume) until the authorities can clear the rubble
rather than taking turns with opposing traffic in driving around the
dirtpile (which is what the law permits, and what any reasonable driver
would do). Maybe all the PC system needs is a little more
flexibility. Still, the problem remains of how you define the
"finders", and how you compensate them, even if they do nothing else
but initially bring buyer and property into contact with each other, if
you do away with the PC bright-line rule.

That paragraph casts a bright light on the problem for me. If I
correctly understand the above statement correctly, you enter
the process after the buyer decides on the property they wish
to purchase. So rather than being a buyer's agent, you are a
buyer's advisor/negotiator for the buyer.

I have a friend who does something similar. You decide what
car you want to buy and he negotiates price and financing.
You pay him $500 plus 1/3 of the difference between the price
you were quoted and the price you paid.

Your case sounds very weak to me if I have correctly
understood you.

Dick

>"Jay Reifert" <true-...@true-agent.com> wrote:

>. . . .

Some states allow dual agency, but require disclosure. E.g. Or. Rev.
Stat. § 696.815.

Daniel Reitman

True. In that case, a consumer of reasonable prudence would know that
a contract was being formed, obligating him/her to pay the provider
for services. That knowledge would come from either:
- logical deduction from observation of present circumstances (If I
don't pay the provider, he wouldn't make any money!), or
- knowledge of conventions for that sort of transaction.

> If [a buyer requests and receives *services* from a Realtor],

Because the payment system is different in real estate purchases: In
real estate, the listing agent makes a commission (typically 6%),
which is split (typically 50/50) with a buying agent (if there is
one). Regardless of who the buyer selects as his buying agent, the
listing agent makes money on the purchase.

A consumer of reasonable prudence might expect that a licensee of the
listing company would show him the property without creating any
obligation to hire that licensee as an agent. Why should the consumer
expect this? Because:
A) The consumer knows that the listing company stands to make money
if the consumer buys the property, even through a different agent.
B) The consumer is familiar with many cases, such as open houses, in
each of which a licensee of the listing company (sometimes the listing
agent) shows the property, but such showing does not obligate
prospective buyers to use that licensee as a buying agent.

So, through both logical confirmation that the listing company can
still profit, and through knowledge of the conventions in similar
situations, a prospective buyer might reasonably conclude that being
shown the property by a given agent working for the listing company
shouldn't obligate him to use that showing agent as his buying agent
for that property.

> .....

Alas, repeating myself for at least the fourth time, you have a
buyer who is ignorant of both the law and the trade - even though
he/she might reasonably be able to go through the logic you suggest.

My only solution is that Buyer's Agents, Buyer's Negoiaters, or
whatever you want to call them need to advertise if they want a
slice of the ~Commission Pie~.

To me it doesn't have to do with whether you should pay for what you
receive. The question is who is paid and who is the buyer's agent.

If you walk into the neighborhood drug store and ask the clerk to
show you something, the clerk does not become your agent. If you
don't like the price and buy it for less elsewhere you don't owe the
clerk a fee.

If an agent is holding an open house, he's doing his job. If you
happen to see the house then, you should be free to obtain your own
agent to negotiate the contract.

One thing I've done when selling a house to avoid this problem is to
have the broker agree to charge half the regular fee if he is
representing both sides. You can't protect yourself like that on the
buyer's side, however.

Stu

But I'm not buying the same thing, I'm buying something similar
elsewhere.

Some store give commissions to salespeople. If I go into one, and one
person spends a lot of time showing me stuff, and then someone else
rings up the sale, the first one gets the commission.

You always are; the question is whether the seller has to pay that
person.

That means he'll just ensure that someone related represents the buyer
(a co-worker who does the same for him, perhaps).

Seth