Phillip Phillips sings, “just know you’re not alone / I’m gonna make this place your home,” in his 2012 song “Home.” The lyrics reassure the listener that there is someone out there who supports them. In a similar manner, buyer’s agents can put their clients at ease by reassuring the buyers that the agent will help them throughout the homebuying process. Although the homebuying process is exciting, it can also be unfamiliar and stressful. Buyers want to know they are not alone during their homebuying journey. The following discussions highlight some frequently asked questions regarding buyer agency.

Buyer agency fees 

Can a buyer request in the offer to purchase that the seller pay the buyer’s firm’s fee? 

While REALTORS^® shall not use the offer to attempt to modify a listing firm’s offer of compensation per the REALTOR^® Code of Ethics, as specifically stated in Standard of Practice 16-16, a buyer’s firm may ethically suggest or recommend that the buyer ask the seller to pay some or all of the buyer’s firm’s fee pursuant to Article 16 of the Code of Ethics and NAR Case Interpretation #16-17. The buyer may condition the offer upon the seller paying some or all of the buyer’s firm’s fee on behalf of the buyer, as a seller’s expense at closing. 

For example, if the listing firm is offering compensation on the MLS of 2.0% and the WB-36 Buyer Agency/Tenant Representation Agreement sets compensation at 3.0%, the offer could state, “Seller shall, on Buyer’s behalf, pay to Buyer Agent’s Firm, XYZ Realty, 1.0% of the sale price.” The offer might also explain that this was in addition to the offer of compensation from the listing firm in the MLS, or the buyer’s agent could include an explanation to the listing firm in the email accompanying the offer that the contribution being requested from the seller is in addition to the MLS offer of compensation.

If, on the other hand, the buyer’s firm is waiving the MLS compensation and relying on the seller to pay the buyer’s firm’s entire fee as agreed in the offer, that separate communication must be directed to the listing firm. The seller may wish to amend the listing contract to reduce the amount of commission owed to the listing firm should the offer wherein the seller pays the buyer’s firm’s commission be accepted.

Wis. Stat. § 452.133(3)(a) provides that the buyer’s firm must have the prior written consent of the buyer and seller to accept compensation from the seller because the seller is not the buyer’s firm’s client. The WB-36 Buyer Agency/Tenant Representation Agreement authorizes the buyer’s firm to accept compensation from the owner/seller while the consent from the seller would need to be obtained in the offer.

See the June 2017 Legal Update, “Revised WB-36 Buyer Agency/Tenant Representation Agreement,” at www.wra.org/LU1706, pages 15-17 of the November 2007 Legal Update, “WB-36 Buyer Agency Agreement — 2008 Revisions,” at www.wra.org/LU0711, and the September 2005 Legal Update, “Buyer Agency Practice,” at www.wra.org/LU0509.

A buyer’s agent asked the title company to add additional buyer agency brokerage fees to the buyer’s closing statement. The listing agent does not understand how a buyer’s agent can add these additional buyer agency fees over and above what the listing firm is paying the buyer’s agent’s firm right before closing. Can a buyer’s agent tell the title company to add additional buyer agency fees to the buyer side of the closing statement?  

The WB-36 Buyer Agency/Tenant Representation Agreement addresses the amount of commission at lines 33-36.  The amount negotiated between the buyer and the buyer agency firm may be in excess of what has been offered in the MLS by the listing firm. Therefore, is it possible for a buyer’s agent to receive commission from one or multiple sources to satisfy the amount due.

For example, the WB-36 Buyer Agency/Tenant Representation Agreement may be negotiated so the buyer will pay the buyer’s agent a success fee. This amount may be reduced by the amounts the broker receives from the seller or the listing broker.

If the buyer is responsible for commission in excess of what is collected from the seller or seller’s agents, the additional amount, per the WB-36 Buyer Agency/Tenant Representation Agreement, would be due and payable at the time of closing. The buyer’s agent may request the title company to include the amount as a buyer expense on the closing statement. The buyer’s agent’s request to add the buyer’s payment to the buyer’s closing statement is perfectly legal and ethical.

Buyer agency disclosure 

A listing agent is asking for the buyer agency agreement when the buyer’s agent is submitting an offer. The buyer’s agent is wondering if there is any reasoning behind such a request. Is this allowed since the contract is between the buyer’s agent’s firm and the buyer?

For agents working with buyer clients, once an agent is a buyer’s agent, the buyer’s agent on first contact with the listing firm discloses the buyer agency. Then when drafting the offer, lines 1-2 of the WB-11 Residential Offer to Purchase reaffirm the agent is acting as a buyer’s agent. Although a listing firm may request a copy of the buyer agency agreement or the Disclosure to Clients embedded therein, the cooperating agent is not required to provide a copy because it is a confidential contract between the buyer and the firm. According to document retention rules, there is no statutory requirement for the listing firm to have a copy of the buyer agency agreement or agency disclosure document. 

What are the requirements for a licensee writing an offer for an entity, which does not have a real estate license, in which the licensee has an interest?

The entity is a separate party and is the buyer. The licensee may provide brokerage services as either a buyer’s agent with a WB-36 Buyer Agency/Tenant Representation Agreement or as a subagent of the listing firm. Although a buyer agency agreement is not required by law, it avoids the appearance of a conflict of interest that occurs when the licensee has an interest in the buyer entity but is acting on behalf of the listing firm. Per Wis. Stat. 452.133(3)(b), the licensee must obtain written consent from all parties to the transaction because the licensee is acting on behalf of a business entity in which the licensee has an interest. A licensee shall obtain the written consent in the offer to purchase, option, lease or other transaction contract.

Example: Disclosure of Licensee Entity Interest as Buyer or Seller

All parties understand licensee, __________, has an interest in the (Buyer) (Seller) [STRIKE ONE] entity or organization and consent to the licensee serving as a real estate agent for that entity or organization in this transaction.

This example presumes the licensee is acting in a licensed capacity on behalf of the firm in the WB-36 Buyer Agency/Tenant Representation Agreement and not just a signatory for the unlicensed entity.

For more questions and answers related to an agent’s personal transactions, see www.wra.org/FAQ/PersonalRealEstate.

Agency and representation 

Must an agent have a buyer sign a buyer agency agreement upon first meeting, or can the agent have the buyer sign a buyer agency agreement simultaneous to drafting the offer? 

It is up to the firm to decide when to have a buyer sign a buyer agency agreement and become the firm’s client, but this must be done before any negotiations or the drafting of an offer. If an agent is working with a buyer and the buyer has not yet decided whether to become a client or a customer, the agent and the buyer are in what is referred to as “pre-agency.” During this time, the agent is a neutral information provider who represents neither party. The agent cannot say or do anything that would put the buyer’s interest ahead of the interests of the other party in the transaction. 

If an agent was in “pre-agency” with a buyer and the buyer decided it was time to write an offer or engage in any other negotiations, at that time the agent would need the buyer to pick whether the buyer would be the agent’s client and sign a buyer agency agreement or be the agent’s customer and the agent would give the buyer a Disclosure to Customers prior to drafting the offer.  

See the June 2006 Legal Update, “Revised Agency Law Implementation,” at www.wra.org/LU0606 for further discussion of agency law issues and the services that may be provided in the pre-agency stage and to a customer. Also see the October 2010 Legal Update, “Agency Law Revisited,” at www.wra.org/LU1010.

A firm has a listing contract and a buyer agency agreement. Both the seller and the buyer have agreed to multiple representation without designated agency. Does the agent draft the offer as “Agent of Buyer and Seller”? Does the agent remain neutral? What if the seller and buyer agreed to multiple representation with designated agency and the buyer’s designated agent drafts the offer?

If the buyer and seller both agreed to multiple representation without designated agency, the agent remains neutral between the parties and drafts the offer as “Agent of Buyer and Seller.”

If the buyer and the seller agreed to multiple representation with designated agency, the seller and the buyer each get their own agents, who do not remain neutral, and the buyer’s designated agent would draft the offer as “Agent of Buyer.”

See the discussion on pages 12-15 and 16-17 of the October 2010 Legal Update, “Agency Law Revisited, at www.wra.org/LU1010.

An agent has a seller lead who does not want to sign a listing contract but would be willing to do a one-party listing if the agent finds a buyer. Can the agent do buyer agency with the buyer, and then take the buyer to the home and do a one-party listing with the seller at that time?

Yes. The agent can enter into a buyer agency agreement with the interested buyer and then draft a one-party listing with the seller if the buyer is interested in submitting an offer to purchase. Because the firm will be representing both clients in the transaction, both the seller and the buyer will have to agree to multiple representation in their respective agency agreements. If the buyer and the seller consent to the one agent negotiating the whole transaction, the buyer and the seller would have to consent to multiple representation without designated agency, and the agent would remain neutral between the parties as to their negotiations.

Contract drafting 

In an effort to fill out paperwork using best practice, an agent is wondering whether line 12 of the WB-36 Buyer Agency/Tenant Representation Agreement can be completed by writing in “any and all” on that line instead of actual numbers to indicate the purchase price range?

Not including actual numbers in the purchase price range section of the WB-36 Buyer Agency/Tenant Representation Agreement is creating a risk that a buyer could argue the agency agreement is not valid under Wis. Stat. § 240.10, which lists the requirements for a valid agency agreement. One requirement is that the contract must express, “the price for which the same may be sold or purchased.” If the agency agreement is not valid because it is missing a requirement, such as a statement of the price range, the buyer could argue no commission is due to the firm even if the buyer purchased a property during the term of the agreement. Best practice is to include a price range with actual numbers.

The firm can still earn a commission if the buyer purchases a property outside of the price range stated on line 12. Lines 37-40 of the WB-36 Buyer Agency/Tenant Representation Agreement specify when a firm earns a commission:

COMMISSION EARNED: The Firm has earned the Firm’s commission if during the term of this Agreement (or any extension of it), Buyer or any Person Acting on Behalf of Buyer acquires an Interest in Property or enters into an enforceable written contract to acquire an Interest in Property, at any terms and price acceptable to owner and Buyer, regardless of the purchase price range.

See pages 15-17 of the November 2007 Legal Update, “WB-36 Buyer Agency Agreement – 2008 Revisions,” at www.wra.org/LU0711 and the LegalTalks video, “Buyer Agency Agreement Form Changes with Debbi Conrad,” at www.wra.org/LegalTalks/BuyerAgencyAgreement.

All references in this article to the WB-36 Buyer Agency/Tenant Representation Agreement refer to the 2017 version of the WB-36 form.