The Wisconsin Association of Realtors is
fielding a proposal to revise the state’s real
estate law to permit so-called "designated
agency." But one Wisconsin buyer’s agent is
pulling out all the stops to marshall opposition
to the idea.
The association said the change "would allow a
broker to designate individual agents as the agent
for a seller or a buyer client and thus avoid dual
agency within the firm."
The proposal would apply only to in-house
transactions and consequently would affect only a
small percentage of sales. But as brokerages
continue to grow in size, some observers note, the
potential is great for an ever-increasing number
of transactions in which the buyer and the seller
are represented by the same firm.
The Realtors’ association contends designated
agency wouldn’t deviate much from the way business
already is conducted in the state.
"In other states this is a dramatic issue. In
Wisconsin we already have laws regarding
confidentiality in place," said association
General Counsel Rick Staff. He said the state’s
1994 Agency Reform Act already assures
confidentiality to all parties in a home purchase
"Wisconsin has the strongest duty owed to all
parties in the transaction of any state. All
parties, including the customer, have the right of
confidentiality," he said.
If the law were changed, designated agency
could be utilized at the principal broker’s
discretion. Proponents say this alternative to
disclosed dual agency would result in a higher
level of representation. Staff said the concept is
backed by some state regulators the chairman of
the state’s real estate commission.
The proposal is in the preliminary stages and
still must under go hearings before it is
considered by the state legislature.
At least 20 other states already allow
designated agency. But such groups as the National
Association of Exclusive Buyer Agents consistently
oppose it and even heavy-hitters like Ralph Nader
have weighed in against it.
"If 25 states do a stupid thing, it’s still
wrong," said Jay Reifert, broker/owner of
Excel-Exclusive Buyer Agency in Madison, one of a
handful of exclusive buyer agencies in
Reifert said the proposal is another step in
the dilution of the agent-client relationship that
began when Wisconsin placed confidentiality for
all parties ahead of that relationship.
He said neither the current nor the proposed
law is in alignment with the tenets of the common
law of agency.
"The basic precept of the common law of agency
is that the agent is to put the interests of the
client ahead of all others, including his or her
own," he said. "The temptation with designated
agency is to put the interests of the firm ahead
of either client, the buyer and the seller."
Reifert isn’t alleging that any specific firm
would do so, but he believes designated agency
opens the door to temptation.
Reifert charges that Wisconsin's laws "benefit
large real estate companies by allowing them to
give lip service to agency, while creating an
artificial legal concept that will allow them to
put together the deal at the expense of one or
both clients in the same transaction."
Reifert is taking action against the proposal
by circulating a large number of lengthy e-mail
messages decrying designation agency as a
"conspiracy" to "restrain trade." The messages are
being sent to thousands of real estate agents and
hundreds of government officials, consumer
advocacy groups, lobbyists registered in Wisconsin
and the media, according to Reifert.
Jim Imhoff, chairman of the Wisconsin Real
Estate Commission, believes designated agency is
an appropriate response to changes in the
industry. He cites as an example his own
Madison-based company, First Weber Group, which
has 21 offices and 325 agents.
"If a buyer agent in my company has a client
who wants to purchase a property listed by another
agent in my firm it is dual agency. Under the
current law, the ability of those agents to
represent each party is diminished. Most states
have recognized that fact and gone to designated
agency. That makes sense, particularly since most
real estate firms now are large companies," he
said, noting the dwindling number of firms with
only three or four agents.
Dual agency years ago was taboo in much of the
real estate industry. But it gained respectability
under the cloak of disclosure as more agents began
to represent buyers. Concerns about broker
liability and consumer protection have spurred a
number of Realtor organizations to push for
designated agency laws at the state level.
Some states have adopted such changes with
little fuss. But in other states designated agency
has become a battle pitting exclusive buyer’s
agents against Realtor organizations with each
side arguing it is looking out for consumers’
States grappling with agency representation
issues include Massachusetts. The state’s
legislature defeated a designated agency proposal
several years ago, but a task force that includes
exclusive buyer agents and so-called "traditional"
agents reportedly is studying the issue of
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Copyright 2002 Inman News Features