An interesting question was posed by a real estate licensee the other day. Let’s look at the facts:
Agent 1 was driving the consumers around and pointed to a new community as they drove past its entrance. Weeks later the consumers, without any recollection of the property, drove in and looked at the sample. They met with the Sellers agent (Agent 2), who informed them she did not want to be a dual agent. They met with the builder and the seller’s agent 20 or 30 times. More than 250 e-mails were exchanged. The plans for the home were changed by the builder, with the input from the agent and buyer numerous times. Finally, the builder said “No more free work without a contract.” The agent told the buyers to come to her office the next day to prepare the contract so they could have their attorney perform a review. The next day a contract came in naming Agent 1 as buyers’ agent and demanding one half of the commission. What portion of the commission is Agent 1 entitled to receive?
There are not many recent Pennsylvania decisions on this topic. That is because almost all the disputes go to arbitration and never see a court room. There is some good authority from New York which I will examine. First let’s try to remove some of the clutter from the facts that try to drive a decision by emotion rather than by law.
Every buyer is entitled to a buyer’s agent. Is every buyer’s agent entitled to share in the commission paid to the seller’s agent? It seems rather easy to get lost on the topic of being fair to the agent that writes the contract. The concept of agency is (in my humble opinion) the wrong path to a just resolution. Emotionally it seems attractive, but it does not follow the courts that have addressed the issue.
The real issue is who sold the house. In legalese this is often stated as “Who was the efficient and procuring cause?” The National Association of Realtors has a list of standards that apply to answer this question. We know this: the buyers went knowing nothing of the property to actually buying it and living there. It seems that the real test is to take all the facts and place them in one of two columns: one favoring the seller’s agent and one favoring Agent 1. Some of those facts will have more weight, but that can be the subject of a mental adjustment.
Agent 1 Drove by entrance to community, Prepare an Agreement of Sale
Agent 2 (Seller’s Agent) Met with the buyers and showed them the community, Met with the buyers and helped them pick a specific lot. Met with buyers and helped them pick a specific model home. Met with buyers and builder to develop changes to plans (12 meetings). E-Mails to and from the buyers about details of the home they were buying (200+). Discussions with the buyers about financing the project and a budget. Meeting with the buyer to discuss price.
With lists like this it is obviously easier to see who it was that sold the home. That person is the procuring cause of the sale and is entitled to the commission UNLESS, the multi-list terms and conditions offer to pay a buyer’s agent regardless of procuring cause.