Sometimes when presented with real-life scenarios and hypotheticals, my mind turns to the game Jeopardy. I immediately begin a response that is phrased as a question — like what is the wrong thing to do in a real estate transaction? Or what is that’s not competent? Or what is how to hurt your business reputation? Or what is that’s just rude?   

Unprofessional behavior is something most attempt to avoid because it’s “not a good look” for the reputation of the individual or the entire REALTOR^® profession. However, unprofessional conduct does not typically result in litigation and is often not a violation of the REALTOR^® Code of Ethics or license law. 

Incompetent behavior by a real estate licensee is very different. Incompetence occurs when a real estate licensee is not capable to perform the specific activities required of the licensee. In contrast to unprofessional conduct, incompetent behavior could result in a REALTOR^® Code of Ethics violation, a license law violation and potential litigation. 

A real estate licensee should want to avoid behavior that is both unprofessional and incompetent. 

Incompetent

• Not placing the earnest money into the trust account when required.
• Allowing a buyer access to property without permission.
• Acting as a buyer’s agent when there is no buyer agency agreement. 
• Writing a WB-46 Multiple Counter Proposal when there is only one buyer, and the WB-46 has not been modified to reflect such. 
• Failing to renew a real estate license and continuing to practice anyway. 
• Failing to provide a disclosure to customers when negotiating on behalf of a party who is not a client — a party to an agency agreement.
• Not using the state-approved (WB) forms. 
• Failing to supervise as a supervising broker. 

Unprofessional

• Not returning another agent’s call.
• Hanging up the phone on an agent.
• Speaking rudely, eyerolling or acting in a passive-aggressive manner toward another agent.
• Not introducing yourself to fellow REALTORS^® when you show up to the listing appointment or open house with your clients or customers.
• Continuously revisiting a decision that has been made; returning to it repeatedly will not create a different outcome.
• Speaking disrespectfully to your client or customer. 
• Poorly lit, blurry or messy photographs promoting the agent’s listing. 
• Always late to appointments.  

However, when someone is claiming a real estate licensee has practiced incompetently or violated state law, a complaint can be filed with the Real Estate Examining Board (REEB) at the Department of Safety and Professional Services (DSPS). To learn more about the complaint process, visit dsps.wi.gov/Pages/SelfService/FileAComplaint.aspx. 

To further illustrate instances of incompetent practice as well as the discipline the REEB ordered, see the following scenarios. All of the examples are complaints filed by licensees and consumers from March through August 2022. 

What is the wrong thing to do with the wrong forms?

Facts 

• On June 18, 2020, Agent A entered a WB-1 Residential Listing Contract that states the firm will be paid a 5% commission. 
• The seller, Agent A and two of Agent A’s colleagues signed a “Team/Assist Addendum to Representation/Service Contract” document saying that the term “Agent” is amended to mean Agent A and his colleagues: Agent B and Agent C. This was not a state-approved (WB) form and does not state who drafted it. 
• The seller also signed a “Wisconsin Addendum to Listing Contract” that was not a WB form, does not state who drafted it, and was not referenced in the WB-1.
• In the response to Buyer 1’s complaint, Agent A stated the seller told Agent A that Buyer 1 had been talking to the seller directly for months regarding purchasing the property. The seller asked if Agent A would help Buyer 1 draft an offer, and Agent A agreed. Agent A stated they agreed to a commission of 2.5% if Buyer 1’s offer was accepted, but this 2.5% commission agreement was not documented anywhere.
• On July 16, 2020, Agent A met with Buyer 1 to discuss details of an offer. Agent A did not have a buyer agency agreement with Buyer 1 and did not provide Buyer 1 with a Disclosure to Customers form. An offer was drafted and submitted to the seller. 
• That same day, Agent B, who is one of Agent A’s colleagues, drafted a WB-36 Buyer Agency Agreement with Buyer 2 specifically for the listed property. Agent A, Agent B and Buyer 2 all signed a “Team/Assist Addendum to Representation/Service Contract” document providing the term “Agent” is amended to mean Agent A or Agent B. This is not a WB form and does not state who drafted it. Agent B drafted an offer on behalf of Buyer 2 for the property and submitted it to the seller.
• Agent A said that on July 17, 2020, they notified Buyer 1 that another offer had been made on the property, asked if Buyer 1 wanted to increase the price, and Buyer 1 said yes. Since the seller had not yet signed to accept the original offer, Agent A just re-drafted the first page of the offer with the new price. Buyer 1 did not sign a new offer. The original first page was not included in the transaction documents Agent A provided to the DSPS.
• Later that day, the seller told Agent A they would accept Buyer 1’s offer. Agent A called Agent B and Buyer 1 to tell them the news. Agent B told Buyer 2, and Buyer 2 raised their offer by $25,000. Agent B asked the seller if they signed Buyer 1’s offer, and the seller had not. The seller signed and accepted Buyer 2’s offer.
• On February 11, 2022, Agent B told the DSPS the final commission for the sale to Buyer 2 was 3.2% instead of the 5% provided in the WB-1. Agent B admitted the reduced commission was not in writing.

Violations

• Wis. Stat. § 452.133(I)(b) by failing to provide brokerage services with reasonable skill and care. 
• Wis. Stat. § 452.135(I)(a) by negotiating on behalf of a party who is not the firm’s client without having provided to the party the required written disclosure statement.
• Wis. Admin. Code § REEB 15.04(1) by failing to retain exact and complete copies of all documents received or prepared in connection with any transaction for at least two years.
• Wis. Admin. Code § REEB 16.06(4)(a) and (b) by using a pre-prepared addendum form that did not identify the drafter of the form and was not incorporated by reference into the approved form to which it was connected. 
• Wis. Admin. Code § REEB 24.08 by failing to put in writing all listing contracts, guaranteed sales agreements, buyer agency agreements, offers to purchase, property management agreements, options, financial obligations and any other written proposals regarding transactions, expressing the exact agreement of the parties. 

Discipline 

The agent’s license was limited and was required to complete an education course about forms within 60 days. The agent also must pay costs in the amount of $1,043 within 90 days and could be suspended for non-compliance.

What is not prompt presentation? 

Facts 

• The sellers’ listing in the MLS included a “Best & Final” offer deadline of June 8, 2021, at 3:00 p.m. and indicated the sellers would review all offers at that time. 
• On June 2, 2021, the buyer submitted an offer with a binding acceptance date of June 4, 2021.
• The agent called the buyer to discuss extending his offer deadline to June 8, 2021, but the buyer found another property he wanted to see before extending his offer deadline.
• That same day, the agent spoke with the sellers and mentioned forwarding the offers already received. The sellers questioned this, asking, “I thought I had to wait to see them until Tuesday [June 8, 2021]?” The agent replied that was correct, and the agent did not email any offers to the sellers.
• On June 7, 2021, the agent called the buyer again to discuss the deadline extension, and the buyer asked for another showing of the property as well as a showing of another property. That same day, the sellers reached out to the agent to ask if the buyer’s offer was still valid, and the agent told the sellers that he was still in the process of speaking with the buyer about the offer. The next day, the buyer informed the agent that the buyer would not extend the offer and decided to submit an offer on another property.

Violations

• Wis. Admin. Code § REEB 24.13(3)(c) for failing to promptly present all offers received to the seller for consideration.  

Discipline 

The agent’s license was limited, and she was required to complete an education course about business ethics within 90 days. The agent also was required to pay costs in the amount of $515.

What is knowing the form?    

Facts 

• The agent showed the party several model homes offered for sale by ABC Homes, a homebuilding company the agent represented in the sale of new homes and contracts for new construction homes.
• After the party received a mortgage preapproval letter, the agent met with the party to review paperwork for the purchase of a new construction home. The party asked the agent if they had seven days to back out of the contract. 
• The agent informed the party that the only contingency for having the deposit returned was if they could not obtain mortgage preapproval, but the party already had a mortgage preapproval letter. 
• The party signed the purchase contract and paid the $4,000 deposit. Less than a week later, the party asked to cancel the contract due to financial issues.
• No WB forms were used. The purchase contract is titled, “[ABC] Homes Wisconsin, Inc. Agreement for Purchase of New Home.” There also were addenda, and none of the documents indicate the drafter.
• The contract provided the builder shall complete the home within 150 days of the start of construction, but only if the “Purchaser has demonstrated the ability to close with cash or Purchaser has obtained a pre-approval or commitment for a mortgage loan that satisfies all conditions of the Mortgage Rider attached hereto and has satisfied all conditions contained therein.” The mortgage rider requires the party to obtain a mortgage commitment, not a preapproval letter, and to give the seller notice if they cannot obtain the commitment. The seller can then either agree to finance on substantially the same terms or secure a mortgage commitment on behalf of the party. But if the seller does neither, then “the Agreement shall be null and void and the payments delivered to Seller shall be returned to Purchaser."
• The broker said the forms were drafted by ABC Homes and approved by the builder’s outside counsel, that agents were trained on how to fill out the forms correctly and how to address customer concerns, and the agent had filled in the customer information, purchase price and other information. The broker stated the broker reviews all purchase contracts to ensure they have all the required information to move forward with building a home.
• The firm’s broker entity license expired and was not renewed for approximately six months. The broker indicated that during that time, the firm conducted 36 transactions. 

Violations

• Wis. Stat. § 452.132(1) by failing to supervise the brokerage service activities of each licensee associated with the firm.
• Wis. Stat. § 452.12(5)(bm) by engaging in the practice of real estate when the firm’s real estate license was expired.
• Wis. Admin. Code § REEB 16.04(1) by failing to use approved forms.
• Wis. Stat. § 452.14(3)(i) by demonstrating incompetency to act as a real estate licensee in a manner that safeguards the interests of the public.

Discipline 

The broker’s license was limited and was required to complete an education course about forms within 90 days. The broker and the firm must each pay costs in the amount of $509 each. 

What is lack of supervision?    

Facts 

• The complaint from the licensee’s former firm alleged the real estate salesperson improperly received commissions directly from title companies, failed to submit contract documents for review, and purported to be acting as an agent of the firm while conducting sales independently with regard to three transactions. The firm subsequently terminated the agent. The details below cite three transactions.
• The first transaction closed in 2017:
  - The agent received a $4,075 commission directly from the title company.
  - The agent did not submit any of the transaction documents to his supervising broker for review.
  - The firm did not have signed copies of many of the transaction documents.
  - There was no agency disclosure form in the FSBO transaction.
  - The agent said he directed the title company to pay him directly.
• The second transaction closed in 2019:
  - The agent received a $2,500 commission directly from the title company.
  - The agent did not submit any of the transaction documents to his supervising broker for review.
  - The firm did not have signed copies of the transaction documents.
  - The agent said the listing agent directed the title company to pay the agent directly.
• The third transaction closed in 2020:
  - The agent received a $3,500 commission directly from the title company.
  - The agent did not submit any of the transaction documents to his supervising broker for review.
  - The firm did not have signed copies of many of the transaction documents.
  - The agent said the listing agent directed the title company to pay the agent directly.

Violations

• Wis. Stat. § 452.132(6)(b) by failing to submit to his firm in a timely manner all agency agreements, offers to purchase, leases and other documents executed by the parties and records related to the brokerage services that were used by or received by the licensee.
• Wis. Admin. Code § REEB 24.05(1)(a) by, while acting as an agent in a real estate transaction, accepting a fee or compensation related to the transaction from someone other than the agent’s client, principal firm or firm he was associated with, without prior written consent from all parties to the transaction. Note that this statute is now Wis. Stat. § 452.133(3)(a).
• Wis. Stat. § 452.19(2) that requires that when a licensee is associated with a firm, all fees or commissions be paid to the firm.

Discipline 

The agent’s license was suspended for 10 business days and was limited to practice under the supervision of an approved licensed broker who must submit monitoring reports every three months for one year. The agent was required to pay a forfeiture in the amount of $1,000 and the costs in the amount of $1,238, for a total of $2,238.

What is renewing a license and incompetent property management?     

Facts 

• The real estate business entity credential for the property management company expired on December 15, 2020, and was not renewed until July 13, 2021. 
• The company’s attorney indicated that:
  - The company was acting as a property manager for the rental property owner based on a verbal, non-written agreement between the parties.
  - The rent checks received by the company were held in the company’s business checking account and not in a trust account.
  - The company continued to operate during the months when its license was expired.

Violations

• Wis. Admin. Code § REEB 18.031(1) by failing to deposit all real estate trust funds received in a real estate trust account within 48 hours of receipt. 
• Wis. Stat. § 452.12(5)(bm)2 by engaging in any of the activities covered by the firm’s license on behalf of the firm while its license was expired.
• Wis. Admin. Code § REEB 24.08 by failing to put in writing all property management agreements and any other commitments regarding transactions.

Discipline 

The firm and the responsible licensee were reprimanded, and each paid one-half of the costs of this matter for a total of $327. The license of the responsible licensee was limited pending completion of an education course regarding trust accounts from an approved provider.

What is breach of confidentiality?       

Facts 

• Buyer A made an offer to purchase the home. 
• Two days later, the agent held an open house where the agent met potential Buyer C. 
• Buyer A alleged that he overheard the agent reveal to Buyer C the price in Buyer A’s offer, the price the sellers were planning to counter with, and the price of a previously accepted offer that had fallen through.
• After the open house, the agent wrote an offer to purchase for Buyer C, and Buyer C’s offer was accepted.
• The agent later admitted that at the open house, she had revealed to Buyer C the price in the counter-offer the sellers were planning to make to Buyer A’s offer to purchase.

Violations

• Wis. Stat. § 452.133(1)(d) by failing to keep confidential any information given to the firm in confidence, or any information obtained by the firm that the firm knows a reasonable person would want to be kept confidential.
• Wis. Admin. Code § REEB 24.03(2)(b) by failing to act to protect the public against fraud, misrepresentation and unethical practices.

Discipline 

The agent was reprimanded and required to pay a $500 forfeiture and costs in the amount of $878.

To view all of the REEB disciplinary orders, go to dsps.wi.gov/Pages/SelfService/OrdersDisciplinaryActions.aspx. After agreeing to the terms, you can select by board or by profession — either real estate broker or real estate salesperson.