How does a broker prove the existence of an oral buyer agency relationship?

QUESTION: I recently agreed to work with a buyer who was reluctant to sign a written buyer agency agreement up front. I showed her an MLS listing she was very interested in on two  separate occasions and provided her a great deal of information about the property. Then, to my surprise, she signed a buyer agency agreement with the listing agent who wrote an  offer on the property that the seller has accepted. I contacted the listing agent and told him that although I understood that the buyer had the right to hire him since an oral buyer agency agreement is, by definition, non-exclusive, I felt like I was the procuring cause of any sale that may take place. The listing agent told me that the MLS offer of compensation was only  made to buyer agents and that since I didn’t have a written buyer agency agreement, I couldn’t prove that I was working as a buyer agent when I showed her the property.

ANSWER: The listing agent’s contention does raise an interesting question. Your claim would be based on an argument that you accepted the listing agent’s offer of compensation by  your performance as the procuring cause of the sale, thereby creating a legally-binding contract between your firm and the listing firm for the payment of the compensation. However, even if you were to file a request for arbitration with your local association and were able to convince a hearing panel that you, rather than the listing agent firm, were the procuring  cause of the sale, you would also have to prove that an offer of compensation was made to you in the first place. Stated differently, you can’t accept an offer that was never made to  you!

If a listing agent’s offer of compensation is limited to buyer agents, which is common, how can an agent working with a buyer under an oral agreement prove they were acting as a  buyer agent rather than as a subagent of the seller at the time they showed the property? The manner in which the Working With Real Estate Agents Disclosure was completed is  relevant but not dispositive because the choices that are checked (buyer agency, etc.) only reflect the agency relationships that may apply to the buyer. Hopefully, you would be able to  produce copies of written exchanges with the buyer that would make it clear the buyer understood you were acting as her agent. An affidavit to that effect from the buyer herself would   be very helpful, but under the circumstances it may be unlikely that she will cooperate with you.

If, in the future, you agree to act as a buyer agent under an oral agreement, you should consider using the Confirmation of Oral Buyer Agency Relationship form, which can be found in  the forms section of the NCR website under “Non-Standard Forms.” It’s a sample letter that firms may modify to create their own letter confirming the establishment of an oral buyer agency relationship with a buyer. It might come in handy in a situation like yours, and more importantly, it would meet the requirements of the Real Estate Commission’s agency rule,  which provides that all agreements for brokerage services between a broker and a buyer—including oral agreements—must be “express,” which is defined in Black’s Law Dictionary as  “[c]lear; definite; explicit; plain; direct; unmistakable; not dubious or ambiguous.”

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