Madison Buyer Agency

BUYER AGENTS are committed to protecting their client's best interests, seeking advantages and avoiding pitfalls.  After all, it is the Buyer who brings the money...you PAY for agency whether you benefit from it or not. Does it make sense to pay someone to work against you?  As your advocate, the Buyer Agent is on your side, guiding you. 

 "A Neutral Role"  or  "Dual Agency"

Here is how the WRA describes Multiple Representation or Dual Agency: 

Multiple Representation - In multiple representation (without designated agency), or “dual agency,” as we used to call it, the agents working with the buyer and seller take on a neutral role in negotiations. Each agent working with the parties prepares contract proposals as directed by the client, but may not provide either party with advice about how to gain advantage over the other. While a multiple representation relationship may limit the services provided to a particular client, it does increase the likelihood of the right buyer and seller finding each other. Without party consents to a multiple representation relationship, the company is not able to show its buyer clients the listings of its seller clients. 

Dual Agency: serving two masters, pleasing neither. Interesting how the Wisconsin Realtors Association feels the need to include in the definition an explanation or justification for this legal concept.  Many states feel differently don't allow this type of arrangement.

 Designated Agency  

Here is the Wisconsin Realtors Association description of  Designated Agency:

Designated Agency - In a designated agency relationship, the broker may assign two agents to work with the parties: one to represent the seller as a seller’s agent, and one to represent the buyer as a buyer’s agent. Each agent provides full negotiation services to the respective client, offering advice and opinions to assist that client even if that advice favors the interests of that client over the broker’s other client. Each agent also keeps the confidential information of each client private. Both parties must consent in writing to create designated agency.

Designated Agency: Pretending to Advocate

How can this work?  The BROKER assigns you a new Realtor to advocate for you?  This 'new agent' doesn't know you or your specific needs.  They haven't toured any houses with you, compared the first and second choices, outlined a Plan B...they are simply there to act like your Buyer Agent despite the fact that they won't get paid unless you BUY THAT HOUSE.   Impartial?

Getting a Buyer Agent

Without a Buyer Agency contract signed, the default is that you are a customer. As a customer, you are not due anything more than a legal transaction.  You are not entitled to advocacy, your interests are incidental and the upper hand is held by those who have a signed, legal contract: the Sellers and their Agent.  In order for your Realtor to be looking out for your best interests, you and your Agent need to have a signed WB-36 Buyer Agency/Tenant Representation Agreement, the form that the Wisconsin Department of Regulation and Licensing has approved for precisely this purpose.  However, you are still not 100% certain that “your Buyer Agent” is always your Buyer Agent if that Realtor works for a large firm with numerous listings. Here is why:  at the top of Page 3 of the WB-36 is a section that requires you to initial one of (3) possible options.  These options are to protect the Realtor and Broker from getting caught in the impossible position of being legally bound to fairly represent both sides of a transaction. The (3) options are:

______#1) I consent to designated agency

______ #2) I consent to multiple representation but I do not consent to designated agency

______ #3) I reject multiple representation relationships.

If you consent to designated agency and / or multiple representation, you are agreeing to “hire” a messenger.  Basically, a neutral clerk who will fill out forms, operate a fax machine or attach digital documents to an email.  No advocacy, no advice, no sincere communication on the pros and cons of any given situation.  While the “Designated Agent” wears a mask that looks very similar to a Buyer’s Agent, they still work for the Broker who has both a Buyer AND a Seller and whose sole motivation is to get the deal done with zero preference for who gets the short end of the stick.  Worse, Multiple Representation takes off that mask and clearly directs the Agent to become neutral with no pretext of acting in one party’s favor over the other.  This is the ideal situation for the Broker and the Listing Agent.  They get twice the money and their own interests are served no matter how the Buyer and Seller fare. To further that cause, there is at least one large brokerage that pays a BONUS to their Agents who close “in-house listings”.  Somehow, pushing Buyers to buy the house that pays extra commission doesn’t seem like the sort of representation that most people would be willing to pay for.  Small wonder then that “Agency Issues” is the #1 cause for Errors & Omissions insurance claims.

Why shouldn’t I call the number on the sign in the yard? 

When a Seller lists their house for sale with a Realtor, that Realtor is the Listing Agent and a Listing Contract is signed.  That Seller rightfully expects their Realtor to work to get the highest price with the best possible terms, after all, that is what they are paying for. One of the most basic items on the Listing Agents To Do List is to place a sign in the yard with their phone number, encouraging would-be Buyers to inquire about the house. 

This is a mistake. 

The Buyer has now unwittingly given up their right to their own representative, one who would work to get them the lowest price and the best possible terms.  And the Buyer gets to pay for the Seller’s advocate who will now “double dip” on the commission when the sale closes.  The Buyer brings the money so it could be argued that the Buyer is paying the commission.  Why would the Buyer pay for an Agent who is legally and ethically obligated to get as much money as possible from them?  An Agent (and Broker) who stands to get paid twice as much money when the deal closes?  So now the Buyer wants to ask questions like “what is the lowest price the Seller will accept?”  Ethically, the Listing Agent cannot work to get the Buyer a lower price or better terms as that promise was already made to the Seller, in writing. On the Listing Contract. For the Listing Agent, the Sellers interests come before all others, including the Broker and the Agent.  A Buyer might think that by eliminating the Buyer’s Agent, they can save the commission that would otherwise be paid.  A good idea except that often, that too was addressed in the Listing Contract.  Is the potential for a 3% discount enough to give up everything else that a Buyer’s Agent will do for you?  

Quoted from above:

 "the agents working with the buyer and seller take on a neutral role in negotiations"

Most, but not all, Realtors carry Errors and Omissions Insurance.  This is a sort of Malpractice Insurance for Realtors.  The number one source of claims?   "Agency Issues".  Realtors who don't make clear who it is they work for and get sued by unhappy consumers.  Number One Problem.