The “procuring cause” rule is simple in theory, but complicated in application. It is used to determine a buyer broker’s entitlement to the “offer of compensation” (i.e. a percentage share of the commission offered by the listing broker on the multiple listing service). All Realtors must publish an “offer of compensation” in their listings, so that other members are informed, up-front, how much they will received, should they produce a ready, willing and able buyer, who closed the transaction.
To be clear, listing brokers do not have to prove they were a procuring cause of the sale – they have the written listing contract that essentially guarantees them a commission, even if they do nothing more than take the listing and place it in the MLS.
However, the buyer’s broker, who in most cases does not have a written service agreement with their client, generally must “prove” that their activity resulted in the sale, should a dispute arise between two buyer brokers claiming the compensation offered in the MLS. If there is no dispute, the buyer’s broker simply informs escrow of the amount of commission they are entitled to, and – assuming there is no disagreement with the listing broker over the figures – waits for closing to collect their share of the commission. [MORE: Go to link here.]
