Wisconsin Real Estate Contracts and
Commission Law — Comprehensive Q&A
with Legal Explanations and Case Scenarios
Protected Buyers ✔✔Buyers for which a listing firm has a one year extension of the listing contract.
Closing (Settlement) ✔✔Completion of a real estate transaction where mortgage funds are given to a
buyer who exchanges them with a seller for legal title to the property.
Excluded Properties ✔✔Properties that are excluded from a buyer agency agreement by the buyer.
For a buyer's firm to receive money from the seller, the buyer must consent. ✔✔True
Explanation:
The buyer may request, as a condition of the offer to purchase, that seller pay the buyer's firm fee at
closing with the buyer's consent. The WB-36 Buyer Agency/Tenant Representation Agreement includes
a provision authorizing the firm to receive compensation from the seller or the listing firm.
A listing contract includes a washer and a dryer but the buyer's offer does not mention a washer and a
dryer. The purchase price includes the washer and dryer. ✔✔False
Explanation:
The offer to purchase controls what items a seller must include in the purchase price. The listing
contract is what a seller wants but does not ultimately control what property is included in the purchase
price.
,A listing contract must be at least three months long. ✔✔False
Explanation:
A valid agency agreement must have a beginning and an end date but does not have to be for any
specific period.
A licensee listing a condominium where the condominium association has a right of first refusal should
disclose that to a buyer in writing. ✔✔True
Explanation:
A right of first refusal is a material adverse fact that a licensee must disclose to a buyer before the buyer
writes the offer to purchase.
A valid agency agreement must contain the legal description of a property. ✔✔False
Explanation:
A valid agency agreement does not need to contain a legal description to identify the property. Parties
can use a legal description if the street address is not sufficient to identify the property.
The state-approved residential listing contract is the exclusive right to sell. ✔✔True
Explanation:
The exclusive right to sell is the only type of listing contract approved by the state.
, A buyer's firm may earn a commission if the buyer or any person acting on behalf of the buyer enters
into an enforceable contract to acquire an interest in property covered by the buyer agency agreement
during the term of the agreement. ✔✔True
Explanation:
If the buyer procures an interest in a property covered under the terms of the agency agreement, the
buyer's firm earns a commission.
During a firm's listing, another firm showed the seller's property, wrote an offer, and presented it to the
seller without informing the listing firm. The seller accepted the offer and then told the listing firm that
the seller wanted the other firm to handle the closing. Did the listing firm earn a commission? Did the
other firm behave ethically? ✔✔Yes. According to the terms of the listing contract, a listing firm earns a
commission if, during the term of the listing, the seller accepts an offer that creates an enforceable
contract. In this case, during the term of the listing, the seller accepted an offer that created an
enforceable contract and the listing firm earned a commission despite the fact that the seller wants the
other company to handle the closing. The listing firm should ask the seller to indicate in writing that the
seller wants the other firm to handle the closing. This should help protect the listing firm from any claim
that the listing firm did not fulfill obligations of the listing contract. Whether the other firm complied
with ethical obligations of Wis. Admin. Code § REEB 24.13(5) depends on the circumstances that caused
the firm to work directly with the seller. Wis. Admin. Code § REEB 24.13(5) provides that a licensee may
not negotiate a sale or lease of real estate directly with a party if the licensee knows that the party has
an unexpired written contract in connection with the real estate which grants to another licensee an
exclusive right to sell, lease or negotiate. If the other firm knew that the seller has an unexpired listing
contract, the other firm should have contacted the listing firm for this transaction. The rule does provide
an exception, however, if a firm consents to direct negotiation with the party or where the absence of
the firm, or other similar circumstances, reasonably compels direct negotiation with the party.
A seller who is selling a property For Sale By Owner (FSBO) has found a buyer. The seller contacts a
licensee and asks the licensee to write the offer and handle the closing. Does the licensee need to have
Commission Law — Comprehensive Q&A
with Legal Explanations and Case Scenarios
Protected Buyers ✔✔Buyers for which a listing firm has a one year extension of the listing contract.
Closing (Settlement) ✔✔Completion of a real estate transaction where mortgage funds are given to a
buyer who exchanges them with a seller for legal title to the property.
Excluded Properties ✔✔Properties that are excluded from a buyer agency agreement by the buyer.
For a buyer's firm to receive money from the seller, the buyer must consent. ✔✔True
Explanation:
The buyer may request, as a condition of the offer to purchase, that seller pay the buyer's firm fee at
closing with the buyer's consent. The WB-36 Buyer Agency/Tenant Representation Agreement includes
a provision authorizing the firm to receive compensation from the seller or the listing firm.
A listing contract includes a washer and a dryer but the buyer's offer does not mention a washer and a
dryer. The purchase price includes the washer and dryer. ✔✔False
Explanation:
The offer to purchase controls what items a seller must include in the purchase price. The listing
contract is what a seller wants but does not ultimately control what property is included in the purchase
price.
,A listing contract must be at least three months long. ✔✔False
Explanation:
A valid agency agreement must have a beginning and an end date but does not have to be for any
specific period.
A licensee listing a condominium where the condominium association has a right of first refusal should
disclose that to a buyer in writing. ✔✔True
Explanation:
A right of first refusal is a material adverse fact that a licensee must disclose to a buyer before the buyer
writes the offer to purchase.
A valid agency agreement must contain the legal description of a property. ✔✔False
Explanation:
A valid agency agreement does not need to contain a legal description to identify the property. Parties
can use a legal description if the street address is not sufficient to identify the property.
The state-approved residential listing contract is the exclusive right to sell. ✔✔True
Explanation:
The exclusive right to sell is the only type of listing contract approved by the state.
, A buyer's firm may earn a commission if the buyer or any person acting on behalf of the buyer enters
into an enforceable contract to acquire an interest in property covered by the buyer agency agreement
during the term of the agreement. ✔✔True
Explanation:
If the buyer procures an interest in a property covered under the terms of the agency agreement, the
buyer's firm earns a commission.
During a firm's listing, another firm showed the seller's property, wrote an offer, and presented it to the
seller without informing the listing firm. The seller accepted the offer and then told the listing firm that
the seller wanted the other firm to handle the closing. Did the listing firm earn a commission? Did the
other firm behave ethically? ✔✔Yes. According to the terms of the listing contract, a listing firm earns a
commission if, during the term of the listing, the seller accepts an offer that creates an enforceable
contract. In this case, during the term of the listing, the seller accepted an offer that created an
enforceable contract and the listing firm earned a commission despite the fact that the seller wants the
other company to handle the closing. The listing firm should ask the seller to indicate in writing that the
seller wants the other firm to handle the closing. This should help protect the listing firm from any claim
that the listing firm did not fulfill obligations of the listing contract. Whether the other firm complied
with ethical obligations of Wis. Admin. Code § REEB 24.13(5) depends on the circumstances that caused
the firm to work directly with the seller. Wis. Admin. Code § REEB 24.13(5) provides that a licensee may
not negotiate a sale or lease of real estate directly with a party if the licensee knows that the party has
an unexpired written contract in connection with the real estate which grants to another licensee an
exclusive right to sell, lease or negotiate. If the other firm knew that the seller has an unexpired listing
contract, the other firm should have contacted the listing firm for this transaction. The rule does provide
an exception, however, if a firm consents to direct negotiation with the party or where the absence of
the firm, or other similar circumstances, reasonably compels direct negotiation with the party.
A seller who is selling a property For Sale By Owner (FSBO) has found a buyer. The seller contacts a
licensee and asks the licensee to write the offer and handle the closing. Does the licensee need to have
