Corey Scholtka of BuyHomes.com
Corey Scholtka
(414) 940-5555(414) 940-5555

“Procuring Cause” – what is it and why it is important to understand.

This article explores how Sellers can save 3.6% and Buyers can save 2.4% by understanding how BuyHomes.com & ‘Procuring Cause’ works within the traditional Real Estate system.

The ‘traditional’ real estate system is based on a ‘double-commission’ for real estate brokers. The first commission is typically 3.6% and the second commission is typically 2.4%. In other Metro areas around the USA those numbers could vary, Madison Wisconsin is more commonly found to have 3% plus 3% (for a total of about 6.0%). These amounts could also vary depending on the broker’s level of services (real estate commissions are negotiable). *

When there are two brokers involved in a real estate transaction, the 2nd agent/broker (if they are with another company and not the listing brokerage) is called a ‘cooperating broker. If the Listing broker also finds the buyer of the home, he/she earns both commissions (the ‘double-pop’ in real estate terms). There can be no ‘double-pop’ with BuyHomes.com because I have eliminated the percentage-based 3.6% portion of the commission. The only possible ‘percentage-based’ commission that can be paid is when a ‘Cooperating” broker (agent) brings the Buyer.

The broker who makes ‘first contact’ with the Buyer ~ procures the buyer ~ is considered to be the broker who has earned the second commission (usually 2.4%). If there is ever a dispute over who “procured” the Buyer, then all agents/brokers may be required to arbitrate. Arbitration is mandatory within the Realtor trade group and the results could mean a re-assignment of the commission to another broker.

BuyHomes.com is set up to allow the Seller to assist the Listing Broker with selling the home. With BuyHomes.com the Listing Broker is considered to have procured the Buyer from the Advertisement as long as “No Other Agent” is involved in the sale.  (The listing is exclusive-right-to-sell).

However, a Buyer who has a Buyer Agency agreement with their broker (WB-36 agreement in Wisconsin), has seen the property with a ‘cooperating agent’ or located the home thru another agent/broker could potentially cause the second commission (2.4%) to be due.  The Seller is liable, thru the Listing Contract, for the cooperating broker’s commission which is due upon closing.

If the Buyer locates the home thru BuyHomes.com and then comes direct to the home seller / BuyHomes.com without a second ‘cooperating MLS broker’ then there can be additional savings for the Seller & Buyer. Since the percentage-based commission (2.4%) may not be due to another broker, a Buyer might save money by offering a slightly lower purchase price, and the Seller’s Net proceeds could remain unaffected.

BuyHomes.com is paid about $500 upfront for the MLS Listing service which replaces the (first side) 3.6% traditional commission…. We are paid $1000 upon closing which includes help with Offers, negotiations & Closing. The cooperating broker (percentage based commission) is only paid if another Realtor is involved in the sale.

With BuyHomes.com it is possible to List & Sell your real estate for a total of about $1500. Most of our Sellers pay about 2.4% to another ‘cooperating’ real estate agent/broker since most Buyers these days still work with an Agent.

A final note for Home Buyers –

1) If you are interested in a BuyHomes.com Listing and have “no Agent” I can put you in touch with my Seller for the Showing; just use the contact form on this website or call me.

2) Remember that a traditional Listing broker (who usually gets the 3.6% + 2.4% ‘double-pop’) represents the Seller – not you – in the transaction…  if you are interested in a home (Not Listed with BuyHomes.com) then you need to know that I can represent you in the purchase of your home. I provide advice which benefits your position as a Home Buyer.
* Note: real estate commissions are negotiable and vary from broker to broker. The example numbers used in this article may not reflect what you may be able to negotiate with your broker.

 

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