Multiple Representation

Understanding Multiple Representation Relationships and Designated Agency

When you agree on a specific realtor, he/she will provide you with a broker agreement for services.  Within this agreement, you will be provided with the following choices regarding the relationship you establish with the real estate agent and the brokerage firm.

___ Consent to designated agency

___ Consent to multiple representation relationships, but I do not consent to designated agency.

___ Reject multiple representation relationships.

This post will decipher what each of those choices mean.  It is important to note that a real estate broker is the actual firm/company that employs real estate agents.  Although not common, it is entirely possible to have a one person real estate firm.  In the case of a one person firm, designated agency (as you will learn below) wouldn’t be an option because you need at least two agents to provide the separate and distinct representation.

If you consent to designated agency, it means that different sales agents of the same broker (First Weber, Keller Williams, Coldwell Banker, etc.) could represent the Buyer and Seller in the same transaction.   The buyer’s agent owes its loyalty to the buyer and acts solely in the buyer’s interest and the seller’s agent does the same for the seller.  Each party has their own agent working on their behalf (do not share the same agent).   In theory, designated agency is supposed to provide “full-service” negotiation on behalf of the agent’s client and create the effect that the buyer’s agent and the seller’s agent are independent, as if they were from completely different real estate firms.

If you consent to multiple representation relationships, but do not consent to designated agency this means that the broker can represent both the buyer and the seller in the transaction, cannot at any time put the interests of one party over that of the other and cannot give helpful advice to one that would be detrimental to the other.  With this representation, neither the buyer nor the seller really has anyone in their “corner” looking out for their best interests and is much more limiting than a designated agency relationship.

Rejecting multiple representation relationships (MMR) means that the broker (real estate firm) cannot represent both the buyer and seller in the same transaction.  A consequence of rejecting multiple representation relationships is that you narrow your pool of prospective buyers/sellers.  This is because a buyer who rejects MMRs is essentially saying that they don’t want to look at/consider any properties being marketed by their broker.  The same limitation applies to a seller who rejects MRRs; they would be precluding any potential buyers represented by the same broker.  In reality, if the buyer’s dream house is listed with buyer’s broker (by a different agent), the buyer may switch his/her representation designation and pursue the purchase of the house.

Consent to designated agency or MRR can be withdrawn by written notice at any time, which provides for flexibility if circumstances change.     Generally, the recommended choice is designated agency, but because each situation is different, the particular facts of a representation will dictate the ultimate choice.   If you have any questions about which representation relationship is best for you, please feel free to contact the author, Attorney Josh Kindkeppel, at (608) 255-8000 or j.kindkeppel@els-law.com..