Letters to the Editor

Activist fires on Wisconsin’s designated agency proposal

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
of Operations
Buyer Agency
Madison, Wisc.

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