No one enjoys being dragged into a procuring cause dispute. As a broker, you want to support your agents; however, picking up the phone and having an awkward conversation with another broker is probably not your favorite part of the job.
What steps can you take to prevent procuring cause disputes? Everyone knows who represents the seller. How can your agents strengthen their claim on the buy side?
The Role of Buyer Representation Agreements
The Accredited Buyer’s Representative (ABR®) designation course emphasizes the importance of using signed buyer representation agreements and helps agents gain confidence in tackling this topic with buyers.
Sometimes, however, agents get confused about the role of buyer agreements, which are primarily designed to reinforce expectations, reduce misunderstandings and demonstrate the scope of services provided.
While an agreement is an excellent tool for encouraging loyalty and preventing procuring cause disputes, it doesn’t necessarily prove that an agent is entitled to compensation.
Remind your agents that a listing broker’s offer of compensation is entirely separate from a buyer’s agreement. They’re two unrelated issues.
When arbitration panels consider a procuring cause complaint, they’ll examine the entire course of events. Did the agent fail to stay in contact with the buyer? Did the buyer terminate the relationship for other reasons? These are some of the questions they’ll ask, which can supersede the existence of a buyer’s agreement.
It’s also important to note that each dispute is evaluated independently. Prior decisions are ignored.
New Dispute Resolution Options
A significant downside of arbitration is that one person “wins,” while the other party leaves empty-handed and unhappy. Usually, it’s preferable for the parties to find conciliation through mediation or newer REALTOR® ombudsman programs.
As of 2016, every local and state association of REALTORS® is required to offer ombudsman services to members, clients and consumers. Some associations do this directly, while others have cooperative agreements with another association.
The ombudsman process is informal, voluntary and confidential. Once the parties have agreed to use an ombudsman, an impartial third party, conversations are usually handled over the phone, aimed at helping the parties reach an understanding and consensus.
Often, disputes can be resolved in a few hours or days. Note that the use of REALTOR® ombudsmen isn’t limited to agent-to-agent disputes; associations also rely on ombudsmen to help resolve consumer disputes against agents.
Prevention Is the Best Medicine
If your agents understand the critical factors that can shape an arbitration panel’s decision, they’ll be in a better position to develop behaviors that will prevent procuring cause disputes.
The best way to avoid a dispute is to do the best job possible. Educate buyers, use signed agreements and deliver on your promises.
It’s also a good idea to document your efforts so that you can demonstrate that you stayed in regular contact and provided valuable services.
An Offer From REBAC
Our most recent issue of Today’s Buyer’s Rep, the monthly REBAC newsletter, explores procuring cause in greater detail. We encourage REBAC members to check it out.
If you’re not a REBAC member, but would like to read this issue, please reach out to us at email@example.com and ask for a digital copy.
We also encourage brokers to support the ABR® training to elevate their agents’ buyer representation skills.
Marc D. Gould is senior vice president of Member Development for NAR, overseeing a wide range of professional development programs for REALTORS®, including the Real Estate Buyer’s Agent Council (REBAC). REBAC is the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer. With more than 30,000 active members, REBAC awards the Accredited Buyer’s Representative (ABR®) designation to REALTORS® who have completed the specialized education and documented experience in working with consumers purchasing a home. To learn more, visit REBAC.net.