Tag Archives: Procuring-Cause

Something EVERY home buyer needs to know BEFORE they step on an Owner’s Property.

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looking in houseBefore you look at even ONE house, from IN or even ON an owner’s property, you need to understand the basic framework put into place before the home was listed for sale.

A “For Sale” sign is not a “license to trespass” on someone else’s property.

You are basically walking into the middle of a commission structure AND instruction for your being able “to see it” structure, that is already in place. This arrangement was set BEFORE it was listed for sale by the owner of the property, and that owner’s agreement with “the mls system” and his agent, before the For Sale sign was put in front of the house.

It is something you must comply with, and so something you need to FULLY understand BEFORE you step on or in someone’s private property.

This is true when you walk into any home that is for sale AND listed via an mls system. You do not have permission to go on or in  an owner’s private property, except via the owner’s permission or via an agent who is a member of the mls system. That includes opening the owner’s gate and going in their yard and peeking in their windows. There is no entitlement to trespass on an owner’s property just because it is “for sale”. Some think if a property is vacant and there is a For Sale sign out front, that gives them the “right” to trespass on the property and peek in the windows. It does not.

Without permission from someone with the authority to give you that permission…that is called trespassing. Those with the authority to give you that permission to step ON or IN an owner’s property, do not do that “for free”. You should not be going in or on someone’s property without understanding that you are paying for that privelege by doing so, as the structure to pay someone to let you on or in is already in place via the seller so that you CAN see it. You can’t ask to be on the owner’s property and then try to DICTATE that the seller CAN’T pay the person who provided that access for you.

That is not a FREE “service” and the seller has already promised to pay someone to afford you the opportunity to be on and in his property.

Below is a comment I made on Craig’s post to assist him in knowing what he can and cannot “promise” to give away.

If and when a Buyer includes a portion of “Do It Yourself – DIY” into the scenario to “save money”, they must do so without the “use” of agents…be that the Seller’s Agent or a Buyer’s Agent. Doing some of it YOURSELF…must be YOURSELF and not yourself in the room with an agent whom you do not plan to use to represent you in a real estate transaction.

IF you plan to use an Alternative Business Model or Traditional Agent who will PAY you for the portion you choose to handle “by yourself”, you need to hire them in advance of seeing any home. You also need to be certain that the portion of “rebate” you are looking to get is for work that YOU did with no agent contact whatsoever, outside of the agent you hire to represent you.

Below is the reason WHY, and also my response to Craig who asked the question in the Rain City Guide post previous to this one. Below is my comment, in response to his quandary, in its entirety.

“Let’s assume for a minute that there is a 6% commission set by the seller to his purpose of selling his home, of which the original referring agent (the Listing Agent) and the “Procuring Cause

Representation by RE Agents: Is That an Oxymoron?

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As we continue to build WaLaw Realty, I am frequently reminded of the tension between “buyer representation” and the realities of being a real estate agent. On the one hand, agents tout the importance and benefits of “representation.” A “representative” acts on behalf of another, the client, and protects the client’s interests. Needless to say, trust is an essential element of any representation.

On the other hand, agents are salespeople compensated by the seller for selling a home. These two roles are inconsistent with one another. A recent experience of mine illustrates the point. [Forgive my use of “s/he” as a gender neutral pronoun, but that’s a lot easier than avoiding the pronoun entirely.]

I was retained soley as an attorney to assist with a non-MLS purchase. As negotiations progressed, my clients realized that they might not reach agreement with the sellers as to the terms. Accordingly, to hedge their bets (they must move from their current residence) they began looking at homes listed on the MLS. To gain access to these homes, they contacted the number on the sign, the listing agent.

The listing agent indicated that s/he was busy but that s/he would send another agent to provide access. My clients assumed this was an associate of the listing agent, and the listing agent was taking steps to provide access as part of the job of selling the home. The clients were interested in two homes listed by the same agent, and the “associate” provided access to both, only one of which was suitable for my clients. Total time: Approximately one hour. At the end of the tour my clients informed the showing agent that they intended to use my services if they wanted to move forward. The showing agent did not mention that she was totally unrelated to the listing agent and would have a potential claim on the SOC if the clients purchased either home.

The negotiations collapsed on the first non-MLS transaction, and the clients decided to make an offer on the MLS-listed home. Accordingly, they then hired me as a real estate agent. As my web site makes clear, I rebate the SOC to my client in full (after payment of my flat fee and any additional fee incurred by client). Commission rebates to buyers are quite common and I am certainly not the only broker to offer it. Recognizing the possible claim, I contacted the “associate” who provided the initial tour of the home.

The “associate” was actually another agent working under a different broker in a different firm. The listing agent frequently refers new business to this “showing” agent. Because I cannot rebate a commission to which some other agent has a claim, I asked the showing agent if s/he was going to assert a claim on the commission (as the “procuring cause”). The answer? Yes I am! But as a compromise s/he offered to accept 30% of the commission, a typical referral fee. With a sale price of about $700k, s/he wanted $6k for the hour of work.

The story is still unfolding, so I can’t tell you how it ends. But I CAN point out that this claim on the commission is 100% inconsistent with any notion of “representation.” Again, that relationship is built on trust. At an absolute minimum, the showing agent should have explained the fact that, by opening the door, s/he may be entitled to the SOC. The failure to do so was not consistent — at all — with trust between an agent and a client.

I’m curious to hear some counter-argument. It seems to me that agents have been remarkably successful in having their cake and eating it too. They tout the importance of “representation” only to completely ignore basic principles of fairness to the client when its in their interest to do so. They’ve sold the public a bill of goods, because to agents “representation” is ultimately a means to an end, not an end unto itself. But then again, they’re salespersons, selling is what they do, and why they get paid in the first place. Its not about representation, its about sales. And the phrase “representation by a real estate agent” doesn’t make much sense at all.

Your opinion appreciated

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[photopress:blog.jpg,thumb,alignright]I’d like your opinions on this one.  Still scratching my head over this scenario.  Five brokers got together after it closed and had FIVE DIFFERENT opinions!  That’s the day I realized that NONE of us seem to agree on “THE RULES” anymore and hence the day that I started supporting alternative business models.  When five real estate brokers can’t agree on the rules, then it’s a free for all and anyone can play it any way they want, is how I saw it at the end of this scenario.  What do you think?

Brand new agent is working with a buyer friend/client who lives in her building.  They see each other most every day, though they first met at an Open House in the same building where they both live.  Agent wrote an offer for this buyer on the property where they first met, but that buyer didn’t get it.  So they continued to look at property together for weeks, maybe months.

Since the agent was new, never sold a house, the broker and associate broker of the company often accompanied the new agent and buyer when viewing property and always when the buyer was interested in the property and ready to write an offer.  So the buyer was well served and well covered on all fronts and had even been to the home of the broker and the home of the agent.

One day the associate broker suggested to the buyer and the buyer’s agent, that the buyer sign a Buyer Broker Agreement so that the agent could solicit For Sale By Owner and unlisted sellers on behalf of the buyer.  This way the seller would know the agent was not representing them, but the buyer, when asking if they might be interested in moving and selling.  Since the buyer knew pretty much exactly where she wanted to live, the associate broker felt a little “door knocking” was in order and a Buyer Broker Agreement needed since the door knocking was in the building where both the agent and the buyer lived.  Both agreed and the buyer signed a buyer agency agreement.

One day the Broker received a call from an agent regarding a property that had been on market a very long time.  Three brand new townhomes that no one seemed to want to buy for many months in a hot market.  The agent wanted the broker to come and see that one with her and the buyer, but the broker had already seen it and felt the agent could “handle” showing it on her own, which she did.  While the agent was showing, the associate broker contacted the listing agent regarding the availability of the townhomes and to ask some other questions.  The listing agent replied saying “Please bring your clients!”

The buyer that same day decided to make an offer on a different property, and she got beat out by a cash buyer.  The day the buyer found out she was beaten by a cash buyer, she called the listing agent to see if the other new construction property was still available.  She could pretty much see the sign from her window and just picked up the phone and called from the sign before bothering the broker (agent having gone on vacation). 

OK – here’s where you have to start paying close attention.

Buyer calls listing agent to see if it is available.

Listing agent says “Yes, but you better HURRY and get your agent to write that offer.” (8 months on market and 3 of them for sale)

Buyer says, “I just wanted to know if it was available, I can’t afford it anyway”.

Listing Agents says, “What can you afford?”.

Buyer says “$90,000 less than the asking price.”

Listing Agent says “I can’t let it go for that, but I can do it at $60,000 less than asking price.”

Buyer almost falls on the floor and says…OK…

Listing Agent again says “hurry”.

Buyer starts to say, thinking to herself, “My agent went on vacation…” before she gets to “I’ll need to call the broker…”

Listing Agent jumps in and says…”No problem, I’ll write up, I’ll even come to your house and do it.”

Listing Agent gets to buyer’s house

Buyer starts backpeddling, “I really can’t afford more than $90,000 less than asking price…”

Listing Agent says, “I can’t let it go for less than $60,000 under asking BUT the seller can pay 2% of the sale price toward your closing costs,IF we only pay your agent 1% of the 3% commission.”

Buyer says, “Can you do that?” 

Agent’s says, “Sure, it’s called a ‘referral fee’ and I do it all the time.

Listing Agent writes into the contract…”Selling Office Commission of 3% to be divided as follows: 1% to Buyer’s Agent and 2% to Buyer to pay closing costs.”

Basically…listing agent “pulled a Redfin” our of her hat.

In doing so, the listing agent sold all three of the townhomes for the seller, as everyone was waiting for someone to buy one.  Once he had a contract on one, he was able to get all three in contract within 48 hours.

So Listing Agent did a GREAT job for his seller client, by getting all three that had been on market for 8 months SOLD in 48 hours by twisting the arm of someone else’s client.  Some say that was his job and a good thing.

Buyer was left totally unrepresented and didn’t realize that “a referral fee” did not give her representation AND she didn’t notice that the contract she signed with the Listing Agent to buy the house said “NO ONE is to REPRESENT the buyer and ONLY the seller is represented”.  It didn’t state it that clearly.  Two little blocks were checked where it said SELLER, leaving the buyer unrepresented.  But the buyer chose to live with that in the end, after it was explained to her by the associate broker of the buyer’s agent a week later, in exchange for 2% of the buyer agent fee.

Your thoughts? A lot of agents know who the Listing Agent is, because the agent does this a lot.  Please do not use the agent’s name in your comment.  I will have to delete it if you do.  Let’s keep this “generic”.