The Dual-Agency Bidding War
A salesperson in a competitive urban market lists a semi-detached home at $899,000 with an offer date. The market is hot and the seller expects multiple offers. The salesperson's own brokerage also represents a buyer client - a young couple - who wants to bid on the same property. The salesperson has shown the couple several homes and has a signed buyer representation agreement with them. On offer night, the couple tells the salesperson their maximum is $1,050,000 and asks the salesperson to 'find out what the other offers are' and to 'tell us if we need to go higher.' Another salesperson in the same brokerage is handling a different buyer who is also bidding. The seller has told the listing salesperson, in confidence, that they would accept $1,000,000. The salesperson has not yet disclosed the conflict to either the seller or the couple in writing.
1. Identify the conflicts of interest in this scenario and explain what the salesperson must do before proceeding.
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There are at least three overlapping conflicts. First, the salesperson personally represents both the seller (as listing registrant) and the buyer couple (under a buyer representation agreement) - a multiple representation situation. Second, another salesperson in the same brokerage represents a competing buyer, which means the brokerage has clients on both sides of a competing-bid situation. Third, the salesperson holds confidential information from the seller (the $1,000,000 acceptance point) and confidential information from the couple (their $1,050,000 maximum), and cannot use either to benefit the other.
Before proceeding, the salesperson must: (1) make full written disclosure of the conflict to both the seller and the couple; (2) obtain informed written consent from both to the multiple representation, or decline to act for one of them; (3) if consent is not obtained, refer the couple to another brokerage or have a different registrant in the brokerage handle them, subject to the brokerage's policies; and (4) establish information barriers so the competing buyer's salesperson does not receive the couple's or seller's confidential information.
Crucially, the salesperson cannot 'find out what the other offers are' and relay them - that would breach the seller's confidentiality and the competing buyers' confidentiality, and in many jurisdictions is prohibited. The salesperson also cannot tell the couple to 'go higher' based on the seller's acceptance point. The correct path is disclosure, consent, and strict separation of information - or withdrawal from one side.
2. The couple asks the salesperson to reveal the other offers. How should the salesperson respond, and what can the salesperson legitimately tell them?
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The salesperson must refuse to reveal the contents of competing offers. In a multiple-representation situation, the salesperson owes confidentiality to the seller and to each buyer client; disclosing one buyer's price or terms to another buyer is a breach of confidence and undermines the integrity of the process. The salesperson also cannot use the seller's confidential acceptance point to coach the couple.
What the salesperson can legitimately do: (1) explain the offer process and the seller's stated expectations that were publicly communicated (e.g., 'the seller has said they will review all offers on the offer date'); (2) advise the couple, as their buyer representative, on market value using comparable sales and their own financial parameters - but the advice must be based on market data, not on leaked offer information; (3) tell them honestly that the salesperson cannot disclose other offers and that their offer should reflect what the property is worth to them and what they can afford; and (4) confirm the terms of their offer and any conditions.
If the couple pressures the salesperson, the salesperson should reiterate the confidentiality obligation and document the conversation. The salesperson should also avoid any statement that could be read as a wink - e.g., 'you'll want to be strong' - because that can be treated as leaking information.
3. The seller asks the salesperson which offer to accept. What guidance can the salesperson give, and what must be avoided?
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The salesperson can and should help the seller compare offers on their merits: price, deposit, financing conditions, closing date, inclusions, and the strength of each buyer's position. The salesperson can present a written comparison and point out risks (e.g., a high offer with a financing condition versus a slightly lower firm offer). The salesperson can advise on market conditions and on the seller's stated goals.
What the salesperson must avoid: (1) steering the seller toward or away from an offer because of the salesperson's own commission or because the salesperson personally represents one of the buyers; (2) disclosing the couple's maximum or confidential financial information to the seller; (3) telling the seller that one buyer is 'good for it' based on confidential buyer information; and (4) pressuring the seller to accept the couple's offer to double-end the commission.
If the salesperson is in a multiple-representation position, the salesperson must be scrupulously even-handed and should recommend the seller get independent legal advice on the competing offers. The salesperson should document the advice given and the seller's decision. If the conflict becomes unmanageable, the salesperson should withdraw from representing one side rather than risk a breach.