Wednesday, February 27, 2002
Inman News Features
Re: "Duel
agency: Proposal to allow ‘designated agency’ under fire in Wisconsin" (Feb.
11) Dear Editor: As the leader of REAL-Reform, Real Estate Agency
Law-Reform, the opposition to the Wisconsin Realtors Association's bizarre
variation on designated agency—which I believe is a flawed anti-consumer concept
with enough loopholes for criminals and the ethically-challenged to abuse
Wisconsin home buyers and sellers--I have to respond to WRA Attorney Rick
Staff's interesting spin. Staff is the architect of Wisconsin's designated agency legislation and
author of legislation that I believe turned Wisconsin into a secret state of
facilitators in 1994. He appears to have claimed that designated agency would
apply only to in-house sale situations which represent a small percentage of
sales. That may be true in less populated areas, but in areas like Madison,
Milwaukee and larger parts of the state--places where most of the WRA directors
who are pushing this concept hail from--the in-house transaction is not a small
percentage of transactions or total revenues. Yet even if it were, allowing one firm--which has a doubled interest in a
successful transaction where it controls/influences two parties in that same
transaction--to purport to act against itself is not right, even if it happens
only rarely. To make matters even more transparent, the draft of the WRA's proposal, which
is about to be released to the legislative committee, not only allows the broker
to designate licensees to represent clients with opposing interests, but it also
allows the broker to designate himself or herself to be one of the designated
agents. While it may be hard for some to see the harm in letting a broker create the
charade of designated agency in a transaction and remain neutral, essentially
letting the licensees battle it out without the broker intervening, how can
anyone not see the conflict in letting the broker be one of the actively
designated agents in the transaction? Staff said Wisconsin has the strongest duties to all parties in a transaction
of all states. But whatever rights accrued to non-client parties were at the
expense of clients who were robbed of the right to true agency and yet continued
to pay for true agency. Staff said designated agency is backed by some state regulators and the
chairman of the state's real estate commission. But the chairman is none other
than mega-broker Realtor James Imhoff Jr., the person who I believe used Staff
to orchestrate Wisconsin's Agency Reform Act of 1994 and who I assert has pushed
the WRA board to foist designated agency upon the citizens of Wisconsin. The state's real estate commission has seven members. Three from the general
public and four who happen to be Realtors. How can consumers get an even break
when the real estate commission has a controlling majority seated from the
industry it supposedly regulates? Imhoff is wrong in his assertion that most real estate firms now are large
companies. Take my board, the Realtors Association of South Central Wisconsin. RASCW has
about 560 offices, of which 466 have five or fewer associates and 367 appear to
be sole practitioner offices. That leaves about 100 offices that could be
considered large, some of which would be mega-brokerages. How does that stack up against Imhoff's claim that most real estate firms are
now large companies? By the way, Imhoff and all twenty-five of his offices are
members of RASCW. Designated agency would be a boon to large offices and mega-brokerages that
cannot compete with common law agents, who primarily come from small firms.
Imhoff's chief desire is to institute a plan that makes all licensees the same,
so his advertising dollars can go farther. That was also the intent of the
Agency Reform Act of 1994. That's right, this is all about limiting
competition! The evil of designated agency is that it allows firms to give lip service to
agency while providing them with loopholes to abuse consumers and limit
competition by taking away from small firms the ability to differentiate
themselves as common law agents--a practice best suited to the small firm. When we no longer can differentiate ourselves under laws that have existed
for hundreds of years, then we small offices will begin to be marginalized by
the advertising dollars of the larger firms--just as Imhoff hopes. Finally, in response to Tom Meyer, managing broker of another mega-brokerage
firm in Madison: Agency is not about lawyering. Lawyers are but one kind of
agent. Just about anyone who is employed by another can be an agent and owe
agency-level duties under the common law to his or her employer. Thus has it
ever been and thus it should continue to be. While I would wholeheartedly support anyone’s right to practice as a
facilitator, if that's what he or she wants to do, but I will not allow anyone
to take away my right to practice as an agent, offering a higher level of
service and responsibility to those for whom I choose to work. Only in the world of real estate has the bastardization of the common law of
agency been allowed. Why do you suppose that is? Jay Reifert Copyright 2002 Inman News Features
Organizer/Director
of
Operations
REAL-Reform
Broker/Owner
Excel-Exclusive
Buyer
Agency
Madison, Wisc.
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