In Wisconsin, as is the case in many states, the real estate agent working with the Buyer to purchase a house is by law obligated to represent the seller's best interests unless that agent has obtained a Buyer-Agency Agreement signed with that Buyer.
In all situations, whether they are representing the Buyer or the Seller, all agents are required to provide:
Fair and Honest Treatment. So all agents must provide honest and accurate answers to you, when answering your questions.
Disclosure of Material Adverse Facts. Agents must tell you about material adverse facts that you don't already know or that you aren't able to discover through careful, vigilant observation. Adverse facts are considered conditions about the property that would have a significant adverse affect on the property's value, or that would have a significant adverse affect on the health of the occupants, or information about the inability or refusal of a party in the offer, to carry out the offer. Adverse facts would include things like problems with basement water, or the property failing to have legal access, or that the property is controlled by a bankruptcy trustee because the seller has filed for bankruptcy.
Confidentiality. In situations, except illegal ones, whether the agent is representing the buyer or the seller, if you inform the agent that you want any information to be kept confidential, the agent must must keep to your information confidential. The agent must also keep confidential any information that the agent could reasonably expect you'd want to have remain confidential. You are able to list specific information that you want to be kept confidential, when you complete the broker disclosure statement that the agent gives you before you begin any negotiations. You can also list any specific information that you authorize the agent to release that you might otherwise be believed to want remain confidential. This might be things like informing the seller with your permission, of your financial qualifications to encourage the seller to accept your offer.
Accurate Market Condition Information. You might ask the agent to provide information about market conditions the affect your transaction,and the agend must respond with market information such as the sale price of comparable properties. The agent must respond within a rreasonable timeframe.
Reasonable Skill and Care. Every real estate agent must be knowledgeable about real estate laws, public policies, current real estate market conditions, and the physical characteristics of the property being sold. Every agent must use reasonable care and skill in inspecting properties they're involved with, preparing and then explaining the purchase contract and any other related legal documents to you, recommending professional third party expert advisors when appropriate. This could include attorneys, licensed professional building inspectors, building contractors and accountants where appropriate. The agent also must use reasonable skill and care in monitoring deadlines and closing dates. The agent is also responsible for making reasonable efforts to help you locate a property meeting your criteria if that agent is working with you as a buyer.
Safeguarding of Funds. Every agent in all situations, is responsible forsafeguarding all funds or any other things of value that are received from the parties to the transaction. This would include things like earnest money deposits, which must be held in the agent's broker's trust account where they are seperated from other funds coming into the broker's posession and where seperate records are kept for each transaction.
Objective Presentation of Offers. Every agent must make objective and unbiased presentation of all proposals and offers to purchase, indicating the advantages and disadvantages of each to the parties involved,regardless of who initiated the offer.
So, if I'm the buyer,how is working with a seller's agent different than working with a buyer's agent?
Remember, in Wisconsin, real estate agents by law must treat sellers and buyers fairly. Agents are not allowed to be adversarial to the seller or the buyer in any case. If you've not signed an agreement with the agent (not just the required disclosure form), you are not the agent's client. You are considered a customer rather than a client. That agent is required to treat you fairly, and we've mentioned the required responsibilities of that agent in this situation,earlier in this report. But that agent is representing the seller rather than you,the buyer. And, because of that, has a higher degree of responsibility to the seller and representing the seller's interests than the agent has to you.
If you work with a buyer's agent, the first thing that will be done for the agent to work on your behalf is for the agent and you to sign a WB-36 Buyer Agency Agreement and the mandatory Broker Disclosure to Clients form. That form spells out the agent's responsibility for fair treatment to all parties as well as the additional responsibilities to you as the client. You are the client of the agent and the buyer's agent receives a fee when you purchase a property and negotiate a successful offer to purchase in accordance with the buyer's agency agreement. Many times the buyer authorizes the full or partial payment of that fee to be to be collected from the listing broker or the seller of the property being purchased. The buyer's agent will help you negotiate the offer for terms beneficial to you and will provide information and advice to you throughout the transaction. The buyer's agent must treat you fairly as that agent must do for the seller of the property but in addition to that must provide a higher level of duties to you as client (the fiduciary duties).
What fiduciary duties are owed to the buyer under a buyer agency agrement?
In addition to the fair treatment responsibilities owed all parties that are mentioned earlier, the Buyer agent must:
Act with Loyalty to the client That agent must loyally represent you, putting your interest ahead of any other parties in the transaction.
Provide any information and advice that you request. If you request, the buyer's agent must provide any information and advice that are material to your transaction.
Disclose material information. The agent must disclose all information that is material to your transaction, including the information that you don't already know and that cannot be discovered through vigilant observation. This means important information you'd want to be aware of in determining your course of action. This would include things like the existence of other offers, especially in cases with things like your trying to negotiate items following an inspection of the property.
Despite what some people may think, a buyer's agent is not used to beat the seller of a property into submitting to all of the buyer's demands. A good buyer's agent recognizes that the most effective way to work with the seller's side on behalf of the buyer is to work constructively so that all parties involved are satisfied with the result. To act in a confrontational way is generally not the most effective way to represent the buyer.
In addition to that, the buyer's agent can give negative opinions and critiques of a seller'sproperty to the buyer, beyond just disclosing the defects of the property. An Agent is not legally able to do this if they are representing the seller of the property.This can be especially important to a buyer as sometimes buyer's get emotionally excited and attached to a property and fail to see some of it's shortcomings. Receiving a balanced negative opinion of a property in such cases,may help the buyer to receive a well informed, comprehensive opinion of the property.
Provide pricing opinions of a property and telling the buyer if the property is priced too high or too low and recommending or suggesting an offering price other than the listed price. A seller's agent is not legally able to do this.
Write the offer to purchase and associated provisions with the buyer's best interest in mind.
Provide and recommend negotiation strategies to help the buyer obtain the best price and terms.
Study the property's history, title and liens so that the buyer is able to make a more informed decision about a property. The degree and amount of this optional investigation will vary from agent to agent and buyer to buyer.
Provide information and advice to the buyer client within the scope of the agent's expertise as a licensed real estate agent.
What is Multiple Representation?
Multiple representation is when one real estate company is working with both the buyer and seller in the same transaction as clients. So,that would be where the company that has put the house on the market (the listing company) also has an agent from the same company working with a potential buyer for that property with a buyer agency agreement in place. In this case, both buyer and seller must consent to the multiple representation scenario for the buyer to even view the property.
And, as if this wasn't confusing enough for the consumer, Wisconsin recently added another possibility in cases of multiple representation. This is a bit complicated but is really an improvement in the way agents are able to serve their clients. In these cases of multiple representation, where a company has the listing and a buyer has a buyer agency agreement signed with an agent from the same real estate firm, and if buyer and seller give their written permission, the agent and company representing the buyer and the seller may continue to represent each as clients under something called multiple representation with designated agency.. Previously, if the same company was working with the buyer and the seller the best the agents could do is try to become "switzerlands" and treat both the buyer and seller equally. In practical terms, this was nearly impossible to do. Because of that, the state came up with something called designated agency. This is something that with the written agreement of their clients,allows the agent who has a buyer agency agreement with the buyer and the property listing agent with the seller to continue representing their buyer and seller as their full "clients"with their written agreement to this arrangement.. After all, it's really not fair to penalize the consumer with reduced representation, just because the buyer and seller agents on a property involved,happen to work for the same broker employing company. Realizing that this may be a somewhat confusing topic to people not involved in Wisconsin real estate on a regular basis, I recommend that you consult with an agent (like me) for a full explanation of this and to answer any questions you may have.
In my opinion, consenting to allow multiple representation with consent to designated agency ensures that the buyer always receives buyer buyer representation regardless of what company has the listing on the property. The only exception to this would be if buyer agent happens to be the listing agent on a particular property of interest. Consult with your agent on how best to handle that situation, should it arise.
With the Buyer Agency agreement in place, the agent and their broker can represent you on purchases involving For Sale by Owners. With the FSBO situation you may need a buyer's agent involvement, even more than usual. In many of these situations, the parties involved may not quite know what they're doing in real estate transactions. The buyer broker can be involved and help facilitate the closing arrangements and paperwork, so that everything proceeds smoothly. That agent can also make sure that you're not overpaying for the property and strucure the offer in ways that represent your best interests.
So, a natural question you might ask is how much does having a Buyer Agent involved in my transaction cost me? How is the Buyer agent compensated?In the Madison area, if the property is on the market and listedwith a mls real estate firm, the buyer brokerage fee is typically paid by the seller, usually in the form of the agents just splitting the commission involved, as they normally would. So, it's not an additional expense for the buyer or seller, compared to a transaction involving an agent working for the seller. If the purchase is from a for sale by owner, usually the seller is asked to pay the fee on behalf of the Buyer in an offer to purchase, at closing. Generally, most sellers are willing to do this, realizing that by doing so, it may mean their house gets sold!