Over the years of teaching and speaking about buyer agency, I have learned one thing: it has a polarizing effect, similar to Number 4 with Packer fans or the reality TV Kardashian family. Without a doubt, buyer agency keeps the conversation interesting.

Before beginning, let’s review the basics. First, to be a buyer’s agent, you must have a signed WB-36 Buyer Agency/Tenant Representation Agreement. The buyer is then your client and you can provide them all the duties that only a client receives: negotiation, loyalty, information and advice, and disclosure of material facts. The WB-36 generally may be used to create a client relationship to help a buyer find a property to purchase or a tenant to rent.

When you strip down buyer agency to its bare bones, it’s a buyer’s opportunity to have an agent provide them opinions and advice regarding the properties covered under the agreement. When the buyer asks, “how much should I write the offer for?” a buyer’s agent can respond with a specific number or advice. This is in contrast to an agent working with a buyer customer, who can only respond in general terms, such as, “submit your best offer.” It’s all about the client relationship the buyer agency contract creates.

However you personally feel about the WB-36, just like all things polarizing, there are several urban legends surrounding it. We’ll review the top five. 

Urban Legend #1: Being a Buyer’s Agent Means Automatic Procuring Cause.

The Truth: In terms of procuring cause, the pressing question is: who caused the buyer to make the offer that resulted in the sale of the property? There is no one act which determines procuring cause - it can only be answered by a full and knowledgeable consideration of all the facts of the case. The broker who can show an uninterrupted series of events that resulted in the successful transaction with the actual buyer will be the procuring cause of the sale.

A buyer agency agreement does not supersede or dictate procuring cause. Often Arbitration Panels will consider the actions of the broker that caused the purchaser to reasonably conclude that the broker had lost interest or disengaged from the transaction, otherwise known as abandonment. In other instances, a purchaser, despite reasonable efforts by the broker to maintain ongoing contact, may seek assistance from another broker. The panel will want to consider why the purchaser “abandoned” the first broker and whether that broker engaged in conduct that caused the purchaser to terminate the relationship, known as estrangement. This can be caused, among other things, by words or actions. Panels will want to consider whether such conduct caused a break in the series of events leading to the transaction and whether the successful transaction was actually brought about through the initiation of a separate, subsequent series of events by the second broker.

Urban Legend #2: In the offer, buyer’s brokers are prohibited from asking for the seller to pay their fees.

The Truth: A buyer’s broker may ethically suggest or recommend that the buyer ask the seller to pay some of the buyer’s broker’s entire fee pursuant to Article 16 of the Code of Ethics and NAR Case Interpretation #16-12. The buyer may condition the offer upon the seller paying the buyer’s broker’s fee on behalf of the buyer as a seller’s expense at closing.
When drafting offer to purchase provisions, buyer’s brokers should specify whether the amounts being paid pursuant to the offer are in addition to or are in place of the compensation offered by the listing broker. Language in the offer where the buyer directs the buyer’s agent to disclaim the MLS offer of compensation is a good start, but that language alone is not enough. The buyer’s broker should advise the listing broker directly, preferably in writing, if the buyer’s broker is waiving off the compensation offered by the listing broker. Otherwise, the buyer’s agent could be paid a double fee - once by the seller based on the offer to purchase language and again by the listing broker through the MLS.

The buyer’s broker also must have been authorized by the buyer in the WB-36 to accept compensation from the owner or the owner’s agent to comply with Wis. Admin. Code § REEB 24.05(1).

Urban Legend #3: You don’t have  to be a buyer’s agent to work with a buyer when the property is an FSBO.

The Truth: Wis. Admin. Code § REEB 24.025(2) states, “Licensees may not provide brokerage services to a client or a customer without an agency agreement authorizing those brokerage services. A licensee who acts as a subagent may do so under the agency agreement of the principal agent and the subagent is not required to have a separate agreement.”

If there is not a buyer agency agreement or a listing contract, then the licensee cannot be involved in the transaction. The licensee would need to persuade one of the parties to enter into a listing or buyer agency agreement.

As a side note, a licensee may not enter into an agency agreement just to draft the agreement between the parties because it would be considered the unlicensed practice of law. The drafting must be incidental to the practice of real estate. If the parties to the transaction have come to an agreement about the terms of the purchase of real property, they should be referred to legal counsel to draft their contract. The broker must provide brokerage services besides just drafting the offer; this would include services such as inspection of the property, disclosure of material adverse facts and negotiation of the contract terms.

Urban Legend #4: A buyer cannot fire a buyer’s agent.

The Truth: Buyers have the power to revoke a buyer agency contract at any time. This is because an agency contract, such as the WB-36, is a personal service contract based upon a special relationship of trust and confidence in the broker. When a buyer directs a broker to stop searching for property, the broker must obey the instructions. In the WB-36, the buyer can terminate only by delivery of written notice. See lines 197-204.

The power to revoke, however, is not a right to do so. Canceling a buyer agency agreement may violate the broker’s rights under the contract. In that event, the broker may demand compensation for the damages sustained as a result of the cancellation. The broker’s damages, in general terms, might include reimbursement for expenses incurred by the broker, such as the cost of mileage, other out-of-pocket disbursements and a reasonable amount for the broker’s time and services. 

Urban Legend #5: The Buyer’s Agent is required to give a copy of the Broker Disclosure to Client form to the listing broker. 

The Truth: The buyer’s agent is not required by license law to provide the listing company with a copy of the Broker Disclosure to Clients, which is contained in the WB-36. The buyer agency agreement is the contract between the buyer and buyer’s broker; the buyer’s agent is not required to produce a copy of the buyer agency agreement for the listing broker. The buyer’s agent discloses the buyer agency status on first contact with the seller or the seller’s agent and then reconfirms that on line 1 of the offer when the offer is drafted.

Wis. Admin. Code § REEB 24.08(8)(a)2 & (c) provides:

“Licensees acting as agents of potential buyers of real estate used or intended to be used principally for one to 4 family residential purposes, who are negotiating directly with the seller or who are aware that the owner of the real estate has granted another licensee the exclusive right to sell, shall notify the seller or the listing broker, as applicable, of the licensee’s buyer agency relationship at the earlier of all of the following:

• a. The first contact with the seller or the listing broker where information regarding the seller or transaction is being exchanged.
• b. A showing of the property.
• c. Any other negotiation with the seller or the listing broker.

(c) Offers to purchase and option contracts. Licensees shall reconfirm, in the offer to purchase or option contract, whom the licensee represents as an agent in a real estate or business opportunity transaction.”

The buyer’s agent may, as a courtesy, have the buyer complete a Broker Disclosure to Clients form, but this is not required. The agent may consult with the broker because some companies, although they may not compel a copy, have negotiated independent company-to-company agreements whereby the brokers agree to submit a copy of an agency disclosure for all customers and clients.

Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.