James L. Goldsmith, Esquire
A Hotline caller alerted me to a "rule" employed by some listing brokers in the Commonwealth. This "rule" is recited in the MLS comments section and provides that a cooperating commission will only be paid to the selling broker if her agent accompanies the buyer to the first visit to the property. Presumably, no matter how critical the selling agent's efforts were in bringing about the sale, that selling agent receives no co-op fee if she failed to accompany the buyer on that first visit.
Remarkably, this "rule" is the antithesis of the analysis NAR promotes for determining the procuring cause of a sale. NAR's approach -- and one shared by PAR and every multiple listing system that is REALTOR®-owned and operated -- is that there is no litmus test to determine who is the procuring cause of the sale. It may not be determined on the basis of who first introduced the buyer to the property nor may it be determined on the basis of who submitted the buyer's offer. These litmus tests (I refer to them as the doorstep rule and "who brings the offer" rule) have merit. Employing either would mean our local associations would no longer have to conduct costly arbitration hearings. After all, determining probable cause would then be a matter of simply identifying who introduced the buyer or who brought the agreement.
This is not what the family of REALTORS® had in mind when the rules of cooperation were forged.
When you become a REALTOR®, you pledge to abide by the Code of Ethics and further, to abide by the rules and procedures set forth in NAR's Code of Ethics and Arbitration Manual, as amended by the state and local associations. In the Manual you will find the definition of procuring cause. That definition is not set forth in a single sentence nor in a single paragraph or even on a single page. The definition covers a multitude of factors that need to be evaluated when determining who was the efficient and direct cause of bringing about a sale. In fact, the Manual expressly provides that litmus tests are to be avoided in favor of a full analysis of all facts having to do with the efforts that brought about the sale.
Consider the following example. A potential buyer is attracted to a home because of the advertising and marketing efforts of the listing agent. The listing agent, who takes the buyer through the home, later fails to return calls and provide requested information. The buyer complains to a friend who tells her she should have a buyer agent. The buyer engages a buyer agent who is responsive and who introduces the buyer to a number of other homes. After a lengthy analysis and after visiting several of the homes, the buyer agent determines that the house the buyer originally saw is the perfect property. The buyer later acknowledges that she never would have bought the listing agent's offering were it not for her buyer agent. Clearly the doorstep rule ignores the complete analysis necessary to determine who was the procuring cause of that sale.
It is understandable why the doorstep rule came about. It isn't fair when a buyer comes unaccompanied to the property and takes the listing agent's time, follows with numerous calls, visits and other exchanges and then goes to Uncle Harry who just happens to have a real estate license! It would be an injustice for Uncle Harry to receive the co-op fee for having done nothing more than pen the agreement.
I have no doubt that these broker-drafted procuring cause rules were created to promote fairness. Unfortunately, they often lead to unfair results and rather than promoting cooperation among offices, they sometimes dampen it. The NAR solution, analyzing each and every transaction from start to finish, is a better way of determining the procuring cause of the sale.
As REALTORS®, you have pledged to abide by that rule.