Buyer Agency Agreement

Agent: A licensee who has agreed to act on behalf of his or her principal and subject to that principal's control.

Buyer Agency: The agency relationship that exists between a buyer principal and his or her buyer's agent.

Principal: One of the parties in a transaction. For example, the buyer and seller are principals in a transaction for the purchase of real estate. A principal is also referred to as a client.

What is a Buyer's Agent?

In Wisconsin, a real estate buyer can choose to work with an agent under the relationship of either a selling agent (also referred to as a subagent or a co-broke agent) or a buyer's agent. Either way, your agent is obligated by law to treat all parties in a real estate transaction fairly.

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, fairly, and in good faith. 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 which 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 a leaky roof or high radon readings, or the fact that a foreclosure sale will prevent the seller from being able to sell.

  3. Confidentiality. Every agent must keep confidential any information which you indicate is confidential and any information that the agent knows a reasonable person would want to be kept confidential. When you receive the required agency disclosure statement that the agent must give you before beginning to provide brokerage services to you, you can list the information you consider to be confidential. You can also list information that might be considered confidential but which you are authorizing the agent to disclose. For example, you can permit the agent to reveal information about your financial qualifications to seller to encourage the seller to accept your offer to purchase.

  4. Provision of Accurate Market Condition Information. You may ask the agent to provide timely and accurate information about market conditions, and every agent must respond with examples of sale prices for comparable properties.

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

  • inspecting properties.
  • preparing and giving general explanations
  • preparing the offer to purchase 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 your criteria.

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

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

What's the difference between a selling agent and a buyer’s agent?

Wisconsin law does not allow real estate agents to be adversarial for or against the seller or the buyer. They are legally required to treat all parties fairly.

If there is no contract between you and the agent the agent is called a selling agent, you are referred to as the agent's "customer" and you are not the agent’s principal. You will, however, receive a Disclosure of Real Estate Agency form that lists the fair treatment duties owed by all agents to all parties, and which indicates that the selling agent is an owner’s agent. 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 identify those situations when you should consult with a professional, such as a home inspector or building contractor, to help you evaluate a property condition, or an attorney or accountant to advise you on legal or tax matters.

If you and your agent both sign a WB-36 Exclusive Buyer Agency Agreement the agent is called a "buyer's agent" and you are the agent's "client." The agreement includes a Disclosure of Real Estate Agency which lists the fair treatment duties owed by all agents to all parties and the duties owed to principals or clients. You are the principal to the buyer's agent and the buyer’s agent receives a fee when he or she successfully helps you find a property and negotiate a purchase contract in accordance with your buyer agency agreement. You have the right to negotiate the fee with the buyer’s agent and determine whether the fee is paid by the listing broker, the seller, by you, or by some combination of these. A buyer’s agent helps you get the best possible price, negotiates for beneficial contract terms, and generally assists you throughout the transaction. A buyer’s agent owes you the fair treatment duties owed to all parties plus the higher level of agent-client fiduciary duties.

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

2. Disclosure. A buyer’s agent is obligated to make a full, fair and timely disclosure to you of all known facts that are lawfully material to a transaction. A material fact is one that a reasonable person might feel is important in choosing a course of action. Examples of material information are:

  • 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.

  1. Obedience. The agent must carry out the obligations stated in the WB-36 Buyer Agency Agreement and must obey all of your lawful orders which relate to agent’s duties as stated in the contract. For example, the agent must order a survey or appraisal on you behalf if 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—he or she must not refuse to show you a property owned by a member of a minority group.

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

The buyer’s agent works for the interests of the buyer. Realtors have access to a lot of data that we are not really supposed to share with buyers unless we have an agency agreement. If an agency relationship exists the agent will be allowed to answer questions such as: "What would be a good price for this property?" "Why are the owners selling?" "How many days has this property been on the market?" "Will you help me find foreclosure properties?" "Do you like this house?"

A buyer’s agent can but a seller's agent cannot:

  • Give a negative opinion or critique of a seller’s property beyond disclosing defects.
  • Recommend or suggest an offering price or give a buyer 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 terms.
  • Disclose all information and research about a property’s history and liens so the buyer can make an informed decision. The level of additional investigation and research that a buyer’s agent may do for a buyer may vary from agent to agent. I am skilled in gleaning valuable information from online sources.
  • Give advice within the scope of the agent’s expertise as a licensed real estate agent.
  • Give recommendations for home inspectors or financing companies they've worked with before.

What is Multiple Representation?

Multiple representation exists when one real estate company represents both the seller and buyer as clients in the same transaction. This means that one agent from a real estate company will be the listing agent, working for the seller as the client, and another agent from the same real estate company will be the buyer’s agent, working for the buyer as a client. Under these circumstances, it is impossible for the company to provide full client-level services and complete loyalty to both buyer and seller. The company and its agents cannot put the interests of one client ahead of the interest of another client involved in the same transaction. In a multiple representation, the real estate company and its agents assume the role of middlemen in negotiations, draft contracts to accomplish the intent of the parties, and present contract proposals in an objective manner. Both the buyer and the seller must agree in writing to this special arrangement.

Please feel free to contact me with any question about the benefits and your responsibilities in a buyer agency relationship.

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