Procuring Cause

Ask Phyllis: a blog series of frequently asked real estate questions. Email us here

Procuring Cause

Dear Phyllis,

My daughter has been renting her current apartment for eight years. It is now time for her to purchase and I have been sending her condo listings from Zillow. Last week she went to one in Pasadena. She signed the guest registry and checked she didn’t have a real estate agent. She talked to the sales lady about making an offer. When she and I spoke, I told her she should have her own representation. I had my Realtor® contact her; she made some very good points: My daughter was going to pay cash, my Realtor® told her to discuss financing, versus cash with her CPA.

This is the first place my daughter has looked at in person and I don’t believe she should rush into anything. To get to the point: My Realtor® contacted the sales office and offered to give a portion of her commission to the sales lady on site. They won’t return her calls. I don’t want my daughter to purchase anything without her own Realtor®. So, it appears we have to pass on this unit, but it seems so wrong.

Evelyn

Dear Evelyn,

It does seem that the sales office didn’t give your daughter good consul. Of course, your daughter should speak to her CPA about financing vs. cash. In addition, I am not a fan of paying cash for condos because many don’t have earthquake insurance. After the Northridge earthquake in 1994, some homeowners’ associations went bankrupt because they couldn’t afford to rebuild.

If your daughter is in a position to pay cash, it seems hasty for her to purchase the first and only condo she has seen, especially without her own representation.

In each real estate transaction, there is “procuring cause” which refers to actions that begin or set in motion a series of events that lead to the final sale of the property. I am not an attorney and can’t advise on who would have procuring cause as it is very complicated. It seems fair that your Realtor® is offering the sales agent a portion of her commission (referral fee). However, with many new construction developments, the builder only pays commission to agents who have preregistered their clients with the sales office. Since your daughter toured the property and signed a guest register without a broker registration at the same time, it is doubtful the developer will pay your agent the commission.

Related Post: How real estate agents find clients