Add Row 
Add 
Procuring Cause: A Retrospective on Real Estate Transactions
In the ever-evolving landscape of real estate, the concept of 'procuring cause' remains a crucial element in determining broker commissions, despite the recent antitrust settlement from the National Association of Realtors (NAR). This legal standard, defining who is primarily responsible for initiating the sale, continues to affect how commissions are negotiated and awarded, as highlighted by Matt Troiani, NAR’s senior counsel.
Why Procuring Cause Matters Today
Despite rumors suggesting that the concept might fade away following the NAR settlement, Troiani reassured attendees at a recent Realtors Legislative Meeting that procuring cause is not only alive but will continue to play a role in arbitration disputes. It is vital for real estate professionals and clients to understand this ongoing relevance, as it can impact commission agreements and relationships between agents and buyers.
The Legal Foundations of Procuring Cause
Legally, procuring cause has deep roots, enshrined in many state laws as well as the NAR’s Code of Ethics. Defined as the agent whose efforts directly lead to the sale, procuring cause dictates that the broker must have initiated a series of events resulting in the sale. Troiani reiterated that this standard is entrenched in industry norms and cannot be dismissed lightly.
A Shift in Buyer-Agent Relationships
The settlement has introduced new dynamics between buyers and their agents by requiring buyers to decide on compensation before looking at listings. While this change aims to improve transparency, it also raises questions about how procuring cause will be interpreted in practice. With non-exclusive agreements becoming more common, disputes may arise regarding which broker truly deserves the commission, necessitating clarity and consistency in how contracts are handled.
Addressing Criticism: Rethinking Procuring Cause?
Critics like broker Spencer Krull have voiced that procuring cause contributes to unhealthy competition among agents, arguing that it may discourage collaboration. He likens it to a scenario where the first agent who engages a buyer is unduly rewarded, even if a different agent successfully closes the deal. Understanding these critiques is essential for navigating the current commission landscape effectively.
The Future Landscape of Real Estate Commissions
As the real estate market continues to respond to regulatory changes, the role and interpretation of procuring cause will undoubtedly evolve. It remains essential for brokers and clients alike to stay informed about their rights and the implications of contract terms. As echoed by Troiani, the notion of procuring cause may see less frequent discussions in arbitration, but it is a concept that is here to stay, indicating an enduring legacy in how real estate transactions are processed.
In summary, while the real estate industry adapts to new norms, understanding procuring cause is critical for all stakeholders involved. Keeping tabs on changes in commission structures and staying informed through resources like NAR will empower agents and buyers alike to navigate the complexities of real estate transactions.
Write A Comment