As you begin your search for a new home, you’re probably being exposed to lots of new terminology–and sometimes it can be a little confusing! In this article, we’ll help you understand the term “Buyer’s Agency” and what it means for you.
Here are some terms that are often associated with “Buyer’s Agency”:
Agent: A licensee who has agreed to act on behalf of his or her principal and who is 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 to a transaction. For example, the buyer and seller are principals in a transaction for the purchase of real estate. A principal may also be referred to as a client.
So just what is a Buyer’s Agent? In Wisconsin, a real estate buyer can choose to work with either a selling agent (occasionally called a subagent or a co-broker agent) or a buyer's agent. In some ways, a buyer’s agent and a selling agent are alike. Both are specially trained professionals that are licensed by the state of Wisconsin, and who are required by law to treat all parties to a real estate transaction fairly. All real estate agents owe the following duties to both buyers and sellers:
While Wisconsin law does not allow real estate agents to be adversarial for or against the seller or the buyer, and they are legally required to treat all parties fairly, there are some key differences between the selling agents and buyer’s agents:
If you work with a selling agent, there is no contract between you and the agent, 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 where 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 work with a buyer’s agent, you and the buyer’s agent sign a WB-36 Exclusive Buyer Agency Agreement that includes a Disclosure of Real Estate Agency. This Disclosure lists the fair treatment duties owed by all agents to all parties and the duties owed to principals or clients, and indicates that the buyer’s agent is the agent of the buyer. You are the buyer’s agent’s principal or client, 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.
Despite what some people may think, being a buyer’s agent doesn’t mean that he or she will force the seller into submission. The buyer’s agent works for the interests of the buyer but also must know how to work with the listing agent so that the seller sells and the buyer buys. Acting in an adversarial way is not the most effective way to represent a buyer.
Only a buyer’s agent can:
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 interests 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.
Not all real estate agents are REALTORS®. A REALTOR® is a real estate agent who has gone beyond the minimum standards required for licensing to become a member of the REALTORS® Association and has agreed to adhere to a strict Code of Ethics. In addition to the above agent services, a REALTOR® may have access to the Multiple Listing Service. In Wisconsin and Minnesota, MLS is a valuable marketing tool typically available only through a REALTOR®.
Please feel free to contact us with any question about the benefits and your responsibilities in a buyer agency relationship.