Commission Right: "Unbroken Chain," Not "One Date"

Commissiondectomy II... Not surprisingly, February's Dispatch Procuring Cause: "It's One Date and You're Married" (Feb 7) generated a ton of e-mails with tragic and humorous stories of commissions lost and won.

In its simplified (and most inflammatory!) telling, the original incident involved a broker losing a commission when the buyer decided to use her attorney instead of him to buy a property on Nantucket Island.

"Whoa," cautioned one major institutional advisor. "It may be that simple [one date and you're married] for a broker, but not for a buyer. Any preliminary discussion can be fraught with liability peril for the potential buyer if he/she is not careful. I get calls all the time from brokers to see if we are interested in such and such a property. I listen to the pitch, and if there is the slightest bit of interest, proceed to a very pointed discussion about representation and commission expectations.

"Is the broker an exclusive representative of the seller? If not, has the seller engaged a broker already? Who does the broker expect to pay the commission? Before proceeding with any more discussion, we usually make it clear that the broker will look to the seller for the commission, and that we will have no such obligation, and usually document this in writing."

Stephen Blau wrote, "The industry has a well-developed definition of procuring cause... It is premised on being the progenitor of an 'unbroken chain' of actions or events which culminate in a commissionable transaction." Blau and Victor Bruno wrote a lengthy article, "Myths About Broker's Commission Entitlements," originally published by SIOR and now posted at Bruno's web site.

Spread the Word... Many thanks to AvidXchange for sponsoring this week's Dispatch. AvidXchange's electronic invoice management system, AvidInvoice, enables you to manage your properties in "real time."

-- Peter Pike