When someone calls me to tell me they want help writing an offer and they already know what property they want, my heart sinks. Seems counter-intuitive, right? I had to turn down two qualified buyer clients so far this year. I really wanted to work with them, and they each really wanted to work with me. What gives?
Both instances had procuring cause issues. Procuring cause is the legal term that gives a buyer agent the right to claim the person as their client, and therefore claim the compensation due in the sale. The agent must cause the buyer to procure the property—and only one agent can be a procuring cause for any given property. Interestingly, procuring cause has very little to do with whether or not a buyer has signed a buyer broker agreement, which leads to some very unfortunate circumstances like I experienced.
In the first case, the buyer had contacted the listing agent (who represents the seller) to view the property. The agent went on to recommend a lender, and discuss specifics of what an offer might look like in terms of a proposed offer price, settlement date, inspections, etc. (This brings up another pet peeve of mine—dual agency. I’ve yet to have someone explain to me how a single agent can best represent both the buyer and seller in a single transaction. You can deal honestly of course, which one would hope an agent would do regardless of whom they represent, but to fully represent the best interests of both sides seems impossible to me. That’s why many states have made it illegal.) This buyer did NOT sign an agreement with the agent, but nonetheless had an implied agency agreement due to their interactions, which prevented me from representing her.
Moral #1: Do NOT call the listing agent to view a property you’re interested in—you may inadvertently restrict your representation options later. Wait for an open house, or better yet, find your own buyer’s agent.
In the second case, the potential client again reached out to me to ask me to represent him. Unfortunately he had already seen the property—new construction—on which he intended to make an offer. He had seen the property with another agent he had been working with, but whom he now did not wish to be represented by. Again, no signed agreement was in place. But merely by being accompanied by this agent to the sales office, he was now ‘registered’ with this agent. He did it exactly right by registering with an agent—sales offices are notorious for now allowing representation later if you don’t, but unfortunately he decided he just didn’t work well with this agent. But my hands are tied—the other agent is his registered agent, at least for purposes of that particular property.
Moral #2: Choose your agent carefully. You may not be able to change later, with or without a signed agreement.
In both of these cases, the agent is reasonably seen as the procuring cause—that is, the agent who took significant steps to help the buyer procure the property either by providing access, assisting with process guidance, or simply being present at time of registration. Which is why my heart sinks a little bit whenever someone calls me to ask me to represent them and says ‘and I already know which property I want.’ Because chances are that I can’t help them, as much as I’d like to.
Procuring cause gets very complicated. It doesn’t mean that once you start working with an agent, you’re locked in even if you didn’t sign anything. Assuming you are not bound by a written contract, you can begin working with another agent. It just gets a lot trickier (though not impossible) if you end up buying a property you saw with the first agent.
If you’re concerned that you have unwittingly created an implied agency relationship, talk to the agent, or if you’re uncomfortable, the agent’s managing broker. Or barring that, the agent you then wish to engage. It’s quite possible that the first agent will ‘release’ their right and you can move on as you wish. Or alternatively, the old agent and the new agent may be able to work something out. Of course, the best thing to do is, right at the beginning of your search, choose an agent with whom you’re comfortable, but hindsight is 20/20 in that regard. I encourage potential clients to get me involved as early in the process as possible—even if your purchase is many months away. Better to have a patient advisor (I have clients who have been looking well over a year!) than to be denied the representation you want later.