The Seller's Bottom Line and the Spouse-Agent
Broker Park owns Park & Associates, a nine-agent brokerage. He has an exclusive 60-day listing at 4% total commission on Min's three-bedroom condominium, listed at 780,000,000 KRW. On day 12, Park's spouse-an agent at a different brokerage-brings a buyer client who wants to offer 760,000,000 KRW. The buyer is preapproved to 800,000,000 KRW and has signed a buyer-representation agreement with the spouse. Earlier, Min told Park privately: 'I will accept 750,000,000 net because I must close before the school term; don't tell anyone I'm desperate.' The spouse asks Park to reveal Min's bottom line so the buyer can offer 755,000,000 KRW and 'get it done.' Park considers cutting his 4% commission to 3% and paying 0.5% to the spouse's brokerage as a referral. Min has not consented to dual agency. Park's office policy says all conflicts must be disclosed in writing before advice is given.
1. May Park reveal Min's net price or motivation to his spouse? Identify the duties and the required disclosures before any further negotiation.
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Park's duty of confidentiality to Min is the controlling issue. Min's statement that she will accept 750,000,000 KRW net and needs to close before the school term is not market data; it is private negotiating information that a seller would not want the buyer to know. If Park repeats it, the buyer can tailor an offer just above the bottom line, and Min loses bargaining position. Park also has a personal conflict: his spouse represents the buyer and may earn compensation from the transaction. That conflict must be disclosed in writing to Min before Park gives any further advice on price or terms.
The spouse is not automatically Park's dual-agency problem, because the buyer is represented by a different brokerage. But if Park starts advising the buyer about the property, he moves into dual representation and needs informed written consent from both sides. Even without dual agency, Park must not act as the buyer's advocate or use Min's confidential information against her. The correct response to the spouse is: 'I cannot share the seller's bottom line; I can discuss closed sales, the listing history, and what the market supports.'
2. Evaluate the proposed 3% commission with a 0.5% referral to the spouse's brokerage. What must be disclosed, and to whom?
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The 4% commission is Park's contractual compensation and may be reduced by written agreement with Min. A 0.5% referral to the spouse's brokerage, however, is compensation to another broker and must be disclosed in writing to Min and approved by both brokerages. It cannot be a secret side payment. If the referral comes out of Park's own reduced commission and does not increase Min's cost, that helps, but it still creates an incentive for Park to favor the buyer's side and must be disclosed. If the 0.5% is described to the buyer as a credit toward closing costs, the buyer's lender and the contract must approve it; some loans restrict seller or broker credits.
Park should not use the commission cut to steer Min toward the 760,000,000 KRW offer without comparing net proceeds. Prepare a net sheet for each offer showing price, commission, referral, and estimated seller proceeds. If Min refuses the referral, Park must not pay it out of the transaction. The spouse can be paid by the buyer under the buyer-representation agreement instead.
3. Recommend a practical sequence for Park to proceed without breaching duty.
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First, Park should stop the conversation and not disclose the bottom line. Second, he should send Min a written conflict disclosure: his spouse represents the buyer, the spouse's brokerage may receive a referral, and Park has a personal interest in the buyer's success. The disclosure should ask Min to consent to Park continuing or to direct that another licensee handle the listing side. Third, Park should make the same disclosure to the buyer's side so the spouse's client understands who represents whom. Fourth, if Min consents, Park should set a protocol: he will present and compare offers objectively, will not advocate for either side, and will not reveal confidential information. Fifth, if Min refuses, Park should transfer the listing to another licensee in his office or refer the buyer to an unrelated brokerage and pay no referral fee. Sixth, Park should document all disclosures and the net-sheet comparison before presenting the 760,000,000 KRW offer. The commission reduction should be put in a written amendment signed by Min before closing.