REALTORS^® have grown accustomed to explaining the difference between designated agency and multiple representation, and assisting clients with their agency consents in listing contracts and buyer agency agreements. But when the same brokerage company has both the listing and a buyer agency agreement with the potential buyer, and the clients have not consented to the same relationship, the agents involved are sometimes uncertain about the next step.

REALTOR^® practice tip: Neither multiple representation nor designated agency come into play unless there is a buyer who has a buyer agency agreement with the same broker that has the listing for the property that the buyer would like to visit.

1. Designated agency: In a designated agency relationship, the broker may assign two agents to work with the parties: one to represent the seller as a seller’s agent, and one to represent the buyer as a buyer’s agent. Each agent  provides full negotiation services to the respective client, offering advice and opinions to assist that client even if that advice favors the interests of that client over the broker’s other client. Each agent also keeps the confidential information of each client private. Both parties must consent in writing to create designated agency.
2. Multiple representation: In multiple representation (without designated agency), or “dual agency,” as we used to call it, the agents working with the buyer and seller take on a neutral role in negotiations. Each agent working with the parties prepares contract proposals as directed by the client, but may not provide either party with advice about how to gain advantage over the other. While a multiple representation relationship may limit the services provided to a particular client, it does increase the likelihood of the right buyer and seller finding each other. Without party consents to a multiple representation relationship, the company is not able to show its buyer clients the listings of its seller clients.

Wis. Stat. § 452.134 tells us that multiple representation relationships are established when:

a.  Both clients consent to multiple representation (without designated agency) in their agency contracts.

b.  One client consents to designated agency while the other consents to multiple representation.

c.  Both clients consent to designated agency but one later withdraws that consent.

License law explains the legal workings of designated agency and multiple representation relationships for licensees, but what about the parties?

Example: The seller consents to multiple representation in the WB-1 listing contract, and the buyer consents to designated agency in the WB-36 buyer agency agreement, both with the same brokerage company. The buyer wants to see the seller’s property and expects to receive full negotiation services, advice and opinions from the buyer’s agent. By operation of law, since one client chose multiple representation and the other picked designated agency, the relationship automatically becomes multiple representation unless one of the parties changes his or her agency relationship consent.

What should the buyer’s agent do? 

Explain to the client that the seller did not consent to designated agency, automatically creating a multiple representation relationship for the particular seller/property. If the buyer insists upon designated agency services, the agent may ask the listing agent if the seller would change to designated agency for this particular buyer. If not, the buyer may not be able to see this property.

If the buyer will go along with the multiple representation for the particular seller/property, it is prudent to amend the buyer agency agreement to indicate the modified agency election relative to the specific circumstances, even though multiple representation is automatically created by law. Good client service means making sure the client understands and has written documentation, which will also protect the buyer’s agent in the event that the buyer later believes that the appropriate level of service was not provided.

How does a party change his or her agency relationship consent? 

The agent may use an amendment to the listing contract (WB-42) or buyer agency agreement (WB-47) to document the change. The agent also could ask the client to complete a Broker Disclosure to Clients form, making sure that the client signs and dates the form.

REALTOR^® practice tip:Any time a party will not receive brokerage services at the level the party chose in his or her agency contract, prudent REALTORS^® must explain this to the client. If the other party will not accommodate the agency relationship chosen by the client, best practice is to have a conversation with the client and amend the client’s agency agreement to document any agency relationship changes made for the particular transaction.

REALTOR^® practice tip:Review the following DRL brochures and share them with clients: “Your Rights When Buying or Selling a Home,” online at http://drl.wi.gov/dept/savvy/Real%20Estate%20Consumer.pdf and “How the New Real Estate Law Affects your Practice,” online at http://drl.wi.gov/dept/savvy/RE%20Licensee%20Brochure.pdf.

For further discussion of multiple representation, see the June 2006 Legal Update, “Revised Agency Law Implementation,” online at www.wra.org/LU0606.

Debbi Conrad is Director of Legal Affairs for the WRA

 Editor’s note: The DRL became the DSPS in 2011. Information above may not be current.