In our market many of our buyers (and sellers) are not residents of Wisconsin. These customers and clients, familiar with real estate practices in their home states, often are not aware that Wisconsin-licensed agents must by law follow rules that may differ from those with which out-of-state buyers and sellers are familiar. Agency relationship is one area where law and practice varies from state-to-state.
In Wisconsin, no broker (i.e., agent, licensed salesperson, etc.) may provide brokerage services without a written agency agreement that authorizes the broker to provide those services, and no broker may provide services to a party to a transaction unless the broker has provided to the party a written agency disclosure form. To clarify, let's consider a hypothetical residential transaction and see how Wisconsin law applies to the situation.
I have a lake home listed located at 211 Stepping Stone Lane in Manitowish Waters. As the listing agent, I have an agency relationship with the sellers through the execution of the WB-1 Exclusive Right to Sell listing contract. The sellers are my clients. (Actually, technically, the sellers are the clients of my broker. I signed the contract as my broker's sub-agent.) Wisconsin law details the duties that I owe to all parties (to customers and additional duties to clients).
A seller is always a client, but a buyer may be a client or a customer. Even though agents provide agency disclosure forms to all clients and customers, I would be willing to bet that, in regard to customers (especially from out-of-state), many of these buyer-customers do not understand that the agent that they are dealing with has a client, and it is not them. Unless you, as a buyer, have a signed buyer agency agreement with your real estate agent, your real estate agent is a sub-agent of the listing broker, and you are his/her customer.
Let's say a buyer comes into my office and inquires about 211 Stepping Stone Lane (or any property listed by my office or any other office in Wisconsin). I may provide all manner of information about the property (including showing it) to the buyer, but once the discussion turns to how a purchase contract may be structured (the commencement of negotiation), we have to determine our agency relationship before going any further. I may propose to the buyer that we enter into a buyer agency agreement so that I may offer services to the buyer that I may not if the buyer remains my customer. The buyer may accept this proposal, or may choose to remain my customer, which is very common - the norm, actually - in our market.
When a buyer needs to make this decision, the first thing he or she must keep in mind is that Wisconsin law requires all real estate agents to treat all parties (the buyers and sellers) fairly, regardless of agency relationship. As a buyer, whether you are my customer or client, I will:
provide accurate market condition information
safe-guard confidentiality
show you the properties you are interested in seeing
provide you with information on any known or potential property defects
help you identify situations where a third-party expert should be consulted
draft the contract as you direct
make an objective and unbiased presentation of all counter-proposals
and always be truthful in all communications.
If we have a buyer agency agreement and you become my client, I may also:
provide a negative opinion or critique of a seller's property beyond just disclosing defects
offer an opinion about whether a property is priced too high or too low and suggest an offering price
assist you with with negotiation strategies that may benefit the you at the expense of the seller
and put your interests ahead of the interests of any other party to the transaction.
So, as you can see, under Wisconsin law we can have buyer-customers and buyer-clients, and a real estate agent owes additional duties to buyer-clients. If a buyer asks his/her agent that agent's opinion on the list price of a particular property, the agent can offer a negative opinion only if the agent and the buyer have a signed buyer agency agreement. My understanding is that how this works varies from state-to-state, but I have to follow Wisconsin law. I suggest that all buyers, from out-of-state or not, ensure that they understand the nature of their agency relationship with their real estate agent to avoid potential misunderstandings.
Back to our hypothetical example. We have established that in any transaction involving 211 Stepping Stone Lane that I already have a client (the sellers). Now suppose that a buyer comes in and wants to enter into negotiations for that property, and further, wants to enter into a buyer agency agreement as that is his standard practice. Now I have two clients for the same transaction! That brings us to another topic, dual agency and multiple representation, which I will leave for another day.
Several weeks back I went to Iowa for a wedding, and our route took us near where the movie "Field of Dreams" was filmed, and, of course, we just had to go see it. Having seen the movie, it all looked quite familiar, but I was surprised to see power lines right over the 2nd/3rd baseline. Must make for some interesting ball games.
