Expired Buyer Agency Agreement and Procuring Cause

QUESTION: During the term of an exclusive buyer agency agreement between a buyer and our firm, a broker in our firm showed the buyer client several properties. The broker took the buyer back to one of the properties that she was especially interested in for a second showing and provided the buyer with a lot of information about the property. The buyer agency agreement recently expired and for reasons we don’t understand, the buyer decided to enlist the services of a different firm to represent her. We have heard from the listing agent on the property that the buyer was interested in that the other firm may be submitting an offer on it from the buyer. I understand that the buyer can engage whomever she pleases to represent her. My question is, if she buys the property that she was introduced to by our broker, do we have any claim to the commission that is being offered by the listing firm, or are we out of luck because the buyer agency agreement expired?

ANSWER: According to the Code of Ethics and Arbitration Manual of the National Association of REALTORS®, “Agency relationships, in and of themselves, do not determine entitlement to compensation.”  In other words, the mere fact that the agency agreement between the buyer and your firm has expired would not preclude your firm from claiming that it was entitled to the cooperative commission on any sale of the property to the buyer that may take place. On the other hand, the mere fact that your broker first introduced the buyer to the property would not entitle your firm to the commission either. As it says in the Manual, there is “no predetermined rule of entitlement.”  Rather, “procuring cause shall be the primary determining factor in entitlement to compensation.”  An arbitration hearing panel comprised of members from your local board’s Professional Standards Committee would be required to consider all the relevant facts and circumstances presented by the parties and their witnesses in determining who was the procuring cause of any sale. A great summary of the factors that an arbitration hearing panel should take into consideration in determining entitlement to compensation are set forth in the “Arbitration Guidelines” in the Manual (see Appendix II to Part Ten of the Manual, a copy of which can be found on the NAR website at www.nar.realtor under About NAR/Code of Ethics/Code of Ethics and Arbitration Manual.

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