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Unbelievable you say? Well, it’s true. If you make contact with a real estate salesperson or broker who supplies you with information about a property or who shows you a property, they can make a claim to be paid a commission even though you purchase that property through another agent or even directly through the seller. That’s right, even though you don’t use that agent for a purchase of the property they showed you or gave you information about, they have a right to make a claim for a commission. You in essence have become married to that agent after one date or maybe just a handshake. I guess love really is blind.
You are free to use anyone you choose or no one at all to help you buy a home. But, if the home you buy was listed in a Realtor operated Multiple Listing System and if you were working with an agent when you learned about that home or if an agent gave you information about the home or showed you the home, that agent can make a claim to be paid a commission. They do this through Realtor arbitration but it could create a situation that results in you being sued for their commission plus legal costs. How can this be, you ask? Most real estate licensees are members of a REALTOR® Association and/or a REALTOR® run MLS (Multiple Listing Service). The term REALTOR® means a real estate licensee who is a member of NAR, the National Association of REALTORS®. As such they have to abide by the REALTOR® Code of Ethics. This isn’t a bad thing, really, in that you should want to do business with a real estate licensee who is professional and ethical and who agrees to practice according to a strict Code of Ethics. However, this same Code of Ethics makes it mandatory for members to arbitrate “business disputes”.
The National Association of REALTORS® (NAR) Code of Ethics and Arbitration Manual, Article 17, states: “In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between REALTORS® (principals) associated with different firms, arising out of their relationship as REALTORS®, the REALTORS® shall submit the dispute to arbitration in accordance with the regulations of their Board or Boards rather than litigate the matter.” When dealing with disputes having to do with real estate commissions, the method of determining who is entitled to the commission is a concept referred to as “Procuring Cause”. Or, in other words, who started the series of uninterrupted events that led to a successful transaction, i.e., a real estate transaction that closed? You can see how an agent who gives you information or shows you a home has a basis for a claim for commission. They feel that they alone “started the series of uninterrupted events that led to a successful transaction” and that they should be compensated for it regardless of whether or not they actually wrote the contract or did anything else to earn said commission.
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