Teams and Dual Agency: Big Red Flags in Milwaukee Real Estate

What to Know Before Signing a Listing Agreement with Dual Agency

The sale of your home may be the largest financial transaction of your life, so it’s important to be fully educated going into the process. In Wisconsin, the Seller has three options to choose from when determining how they want their real estate brokerage firm to perform their duties during the term of the listing agreement. (See page 3 of the “State of Wisconsin Exclusive Right to Sell Listing Contract.”)

One of the most popular choices is “multiple representation.” This gives a Seller the most options. Multiple representation means the brokerage firm can represent a Seller and also have a buyer-agency agreement with Buyers, meaning the brokerage firm has a fiduciary responsibility to both the Buyer and the Seller.

Within a large brokerage firm of, say, 3,000 agents, this is common practice. One agent will have the listing agreement with a Seller and another agent will have a buyer-agency agreement with a potential Buyer. That’s two different customers but both are contractually obligated to receive client-level services from the brokerage through two different real estate agents. This is designation agency with multiple representation and is a very common practice in Milwaukee-area real estate.

If the Seller selects the “multiple representation” option (checking this box in the listing agreement), the Seller is agreeing to potentially have the same brokerage (through two different licensed agents) represent two different parties (the Seller and the Buyer) in the sale of the home. Under the guidance of a broker and guided by the policies and procedures set forth by the state, the two agents are managed by the brokerage firm throughout the process to avoid a conflict of interest for either party.

So, What is Dual Agency and Why is it a Problem?

Dual agency falls under “multiple representation.” It is when the same listing agent has a signed listing agreement with the Seller AND has a buyer-agency agreement with a Buyer (dual fiduciary responsibilities). This is a direct conflict-of-interest for the Buyer and the Seller. Neither is served well in the negotiation by one party.

Here are some important concepts to understand as you enter a listing agreement:

• Real estate brokerages are not the same as real estate teams. Brokerages manage teams.
• Brokerages might have teams, but they must follow a set of rules established by the state and local boards.
• The duties of a broker are clearly laid out under the licensing laws of each state.

Teams Cannot Serve Two Masters

Teams and team leaders present a much different risk for the Seller than a brokerage firm because there are no state or local laws governing “Team Behavior” in the transaction. If a Seller chooses “multiple representation,” he or she is expressly agreeing to allow the real estate team to represent two masters.

A brokerage firm has two different agents representing the Buyer and Seller; the team is one agent. In this manner, teams present an inherent conflict-of-interest for the Buyer, who has buyer agency, and a Seller, who is selling his or her home with a team. Every transaction within a team is funneled through one agent—the team leader—who is not the broker nor managing broker of the brokerage firm.

Team leaders are agents who have taken on additional agents and staff to help run their businesses and grow their production under the umbrella of a brokerage firm.

It’s crucial to have a full grasp of multiple representation and dual agency and as you’re interviewing agents and reviewing your listing agreement. Go into listing your home or buying a home with your eyes wide open.