Buyer Agency Explained
(Taken from the WRA)

In Wisconsin, a real estate buyer can choose to work with either a selling agent (sometimes also referred to as a subagent or a co-broke agent)  or a buyer's agent.  Either way, your agent is a especially trained professional, licensed by the state of Wisconsin, who is obligated by law to treat all parties to a real estate transaction fairly. 

 

To understand how a buyer's agent is different from a selling agent, you must first understand how they are alike.

 

 

As a real estate buyer, what type of fair treatment can I expect from all real estate agents?

 

All real estate agents owe the following duties to both buyers and sellers:

 

1.  Fair and Honest treatment.  Every agent must provide services honestly and fairly.  When answering your questions, every agent must be honest and accurate.

 

2.  Disclosure of Material Adverse Facts.  Every agent must disclose material adverse facts that you do not already know or that you cannot discover through vigilant observation.  Adverse facts are conditions that significantly and adversely affect the property value, the structure, or the health of the occupants, or information concerning the inability or refusal of a party to carry out the offer.  Examples of material adverse facts include problems with water in the basement, the absence of legal access to the property, or the fact that the bankruptcy trustee now controls the property because the seller filed for bankruptcy.

 

3.  Accurate Market Condition Information.  You may ask the agent to provide timely and accurate information about the market conditions that affect your transaction, and the agent must respond within a reasonable time  with market information such as sale prices for comparable properties. 

 

4.  Reasonable Skill and Care.  Every agent must be knowledgeable concerning real estate laws, public policies, current market conditions, and the physical characteristics of the property being sold.  Every agent must use reasonable skill and care in:

 

•  Inspecting properties

•  Preparing and giving a general explanation of the purchase contract and other relevant legal documents.

•  Recommending that you seek third-party expert advisers (such as attorneys, accountants, home inspectors, or building contractors) when appropriate.

•  Monitoring deadlines and closing dates

•  Making reasonable efforts to find a property meeting the buyer's criteria. 

 

6.  Safeguarding Funds.  Every agent must safeguard all funds or other things of value received from the parties to the transaction.  Funds, such as earnest money or cash advances, must be held in the agent's trust account where they are kept separate from the agent's money and where separate records are kept for each transaction.

 

7.  Objective Presentation or offers.  Every agent must make an objective and unbiased presentation of all proposals and offers, and indicate the advantages and disadvantages of each.

 

 

How are selling agents and buyer's agents different?

 

The first thing to remember is that Wisconsin law does not allow real estate agents to be adversarial toward the seller or the buyer.  They are legally required to treat al parties fairly.

 

If you work with a selling agent and there is no contract between you and the agent, you are not the agent's client.  You will, however, receive a BRoker Disclosure to Customers before the agent may negotiate on your behalf. That disclosure statement lists the fair treatment duties and selling agent owes to you, and indicates an agent of the listing broker (sub agency.)  The selling agent will show you properties you are interested in seeing, get more information about properties of interest, and draft the purchase contract as you direct.  The selling agent must provide you with information about any known or potential property defects, and help you identify situations when you should consult a professional, such as a home inspector or building contractor, to help you evaluate the condition of the property, or an attorney or accountant to give you legal or tax advice.

 

If you work with a buyer's agent, you wand the buyer's agent will sign a WB-36 Buyer Agency Agreement, which includes mandatory Broker Disclosure to Clients language.  This disclosure lists the fair treatment duties owed by all agents to all parties and the duties the agent owes to you as the client.  You are the buyer's agent's client and buyer's agent receives a fee when you find property and negotiate a purchase contact in accordance with your buyer agency agreement,  You have the right to negotiate the fee with the buyer's agent.  You may authorize payment of the  fee in whole or in part by the listing broker or the seller whenever possible in a given transaction, but you generally are responsible to pay any fee not paid in this manner.  A buyer's agent owes you the fair treatment duties owed to all parties, plus the higher level of client fiduciary duties. 

 

 

What fiduciary duties does a buyer's agent owe to  me as the client in addition to the fair treatment duties owed to all parties?

 

1.  Loyalty. A buyer's agent must loyally represent you, avoid conflicts of interest with you, and put your best interest ahead of the interests of any other party in the transaction.

 

2. Information and advice.  A buyer's agent must upon your request, provide information and advice about real estate matters that are material to your transaction. 

 

3.  Disclosure of Material Information.  A buyer's agent is obligated to disclose to you all information that is material to the transaction and that you don't already know and cannot discover through reasonable person might feel is important in choosing a course of action.  Examples of material information include: 

 

•  The existence of other offers

•  The reason the seller is selling, provided the seller permits this information to be shared with others and does not require it to be kept confidential.

 

4.  Obedience.  The buyer's agent must carry out the obligations stated in the WB36 Buyer Agency Agreement and must obey all of your lawful orders that relate to the agent's duties as stated in the contract.  For example, the agent must order a survey or appraisal on your behalf id you ask him or her to do so, provided this function lies within the scope of the buyer agency contract.  However, an agent may not violate the law even if you ask the agent to do this.  For example, the agent may not show you only properties that are not owned by minority sellers. 

 

5.  Negotiation.   The agent is required to act as an intermediary by facilitating or participation in communications between you and the other parties to a transaction, completing offers or other forms as you request, or presenting the proposals of other parties to you and giving a general explanation of the proposal's provisions.  You may waive (in writing) the duty to negotiate in part or in full.

 

 

What are the advantages of working with a buyer's agent?

 

Despite what some people may think, a buyer's agent doesn't rush in and browbeat the seller into submission.  The buyer's agent represents the interests of the buyer, but also must know how to work constructively with the listing agent so that the parties are satisfied with the transaction:  the seller sells and buyer buyer buys.  Acting in an adversarial way is not the most effective way to represent a buyer. 

 

A buyer's agent can:

 

•  Give a negative opinion or critique of a seller's property beyond just disclosing defects.

 

•  Recommend or suggest an offering price or give an opinion about whether a particular house is priced too high or too low.

 

•  Structure the offer and draft offer provisions with the buyer's best interest in mind.

 

•  Recommend and assist the buyer with negotiation strategies for the best price and beneficial terms. 

 

•  Research and disclose information about a property's history, title and liens so the buyer can make a better-informed decision.  The amount of optional investigation and research that the buyer's agent may do for a buyer will vary form agent to agent. 

 

•  Give information and advice with the scope of the agent;s expertise as a licensed real estate agent. 

 

 

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