Understanding “Efforts of Buyer’s Agent” in Representation Agreements

Q: The Buyer Representation Agreement says the buyer will owe a fee to the buyer’s agent if, during the term of the agreement or within 60 days following expiration or termination of the agreement, the buyer enters into an Acquisition agreement due to the “efforts of Buyer’s Agent”. What does that mean?

A: The term “efforts of the Buyer’s Agent” in the Buyer Representation Agreement means that the agent is only entitled to a fee if the agent is the procuring cause of the sale. To be the “procuring cause,” a buyer’s agent must prove that their activity is what eventually resulted in the buyer making the purchase. According to NAR, an agent would be the “procuring cause” of a sale and be entitled to a commission if the agent’s efforts are the foundation on which a series of events starts and, without a break in their continuity, result in a sale.

If you chose to pursue the fee described in the Buyer’s Representation Agreement (which requires dispute resolution to be handled through mediation and arbitration), you would have to prove that you were indeed the procuring cause of the sale.

Your managing Principal Broker or legal counsel can help you evaluate your position and decide on your next steps.

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