Today, we break down what happens when you visit a home without your broker. I’ll go over what’s referred to as “Effective Cause of Sale”, and what needs to be proven in order for a broker to claim their commission.
If your broker isn’t present with you, sometimes the listing broker tries to get you to submit an offer through them directly. To avoid conflict on who gets the commission for the sale, there are some simple steps that can be taken to avoid this.
I received a question from someone who is gearing up to buy their first home, but ran into a situation that turned awkward when they visited a house without the broker. This is one of the hardest questions to date; not because the answer is all that complicated, but because it’s really unfortunate that good honest people can get caught up in situations that make them feel they’ve done something wrong or broken some kind of unwritten rule that they were not aware of.
Cause of sale
There is something we use in real estate that is designed to bring clarity to determining which broker is owed a commission for each transaction called cause of sale. While there is an extended list of steps that can be considered when determining cause of sale, and the purchase of a home, the most common ones considered are
- Interested in the home, either you as a broker sent that listing to the client or they reached out to you about it.
- An in person visit to the home with the buyers.
- The desire to make an offer.
Now let’s look at the most common example of where this can get muddy. Let’s say you schedule a visit at a property directly with a broker who listen to home for sale. Or you visit an open house with a listing broker who is hosting, you ultimately decide you’d like to make an offer on that home and you contact a different broker to submit an offer for you.
If the listing broker was the one who showed you the home, and they send you an email or text about it or any other information about that home, that broker could claim cause of sale on the purchase of the home and as such could challenge that they should receive the commission for doing so. I could go on about what the right thing to do for the realtors involved in the situation is, but I’ll spare you the boring lecture and cut to how to avoid it altogether.
How to avoid ambiguity
- If you’re already working with a broker, and we plan to work with that broker to submit an offer on any home you find it’s best to ask them to schedule a visit for any home you’d like to see.
- If you’ve already reached out to schedule a visit, make sure you let your broker know that you have
- When asked by the listing broker, let them know you’re already working with a broker.
If you aren’t already working with a broker, but we’d like to start visiting some homes, you’re absolutely free to do so. You can opt to submit your offer with the listing broker directly. But it’s important to understand that this listing brokers primary responsibility is to the seller, not to you in this situation.
Ultimately my advice is if you’re serious about buying a home, your best bet is to choose who you want representing you upfront. So do your homework online. Talk to friends and family about their experiences, see who they recommend, and then interview a few brokers to see who works best with you. To have the best home buying experience, choosing the right person who’s a good fit with you is a critical step.
This is #AskPete. If you have any real estate questions, feel free to send them and I will get you the answers. Or stay up to date on the latest tips for real estate buyers and sellers by clicking the YouTube button below: