What is a Protected Buyer?
The concept of a "protected buyer" is often misunderstood by real estate agents. When a listing expires, many states provide for the broker whose listing has expired to provide the seller (and a future listing agent of that property) with a list of "Protected Buyers". If one of the names on that list later turns out to be the prevailing buyer of the property, presumably that prior agent is owed a commission at closing.
In Wisconsin, a listing agent/broker has three days to submit a "protected buyer" list to the seller. And once a new Listing Contract is signed, the seller has seven days from the new listing date to submit to the new Broker "a written list of all such prospective buyers".
That protected list is time-sensitive. That means these prospective buyers don't have forever to act. Moreover, the agent whose listing is expiring can't just open the local white pages and submit every name in the phone book as part of their protected list. Parties protected by such a list must either have submitted a written offer for the property or negotiated directly with the seller. Negotiations mean that the buyer actually discussed the terms under which the buyer would acquire an interest in the property.
A party who attended an individual showing of the property (NOT an open house or a phone call) or a party who negotiated with a real estate broker to purchase the property is covered only if their name is submitted by the prior broker within three days of the expiration of that broker's listing contract. Again, the seller's protected buyer list must be presented to the new listing broker within seven days of the new listing contract.
There is an excellent tutorial about protected buyers on the WRA (Wisconsin Realtors Association) website, written by WRA legal staffer Cori Lamont. I urge anyone who may be mystified or ill-informed about how protected buyer status is determined to give that article a read.
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