The Ceiling Number: In-House Representation and Two Offers
Ana is an associate broker at Prairie Sky Realty in Meridian. Six weeks ago she listed Dale Kessler's 1978 ranch at $489,000. Ana's colleague Sam, licensed at the same brokerage, brought buyer Priya, who has a signed buyer-broker agreement with Sam. Prairie Sky operates under designated agency: each client is represented by an individual agent, and the brokerage acts as a limited dual agent only with both parties' written consent. Dale's listing agreement contains a general consent-to-limited-dual-representation clause, but no transaction-specific consent has been signed. Sam has learned Priya's ceiling is $505,000 and that she must close by August 15 or her relocation benefit lapses. A second buyer, represented by another brokerage, offers $495,000 with a 21-day close and no contingencies. Dale calls Ana and asks, "What's the buyer's top number?"
1. May Sam continue to represent Priya in this transaction? What must happen before any further confidential information moves between the two agents?
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The brokerage can do it, but only on paper, and only if both clients agree right now.
- The general clause in Dale's listing agreement is consent in principle; it is not consent to this transaction. Because both buyers and seller would be clients of Prairie Sky, the brokerage becomes a limited dual agent and needs a separate, signed, transaction-specific consent form from both Dale and Priya before proceeding. Use the Commission-recognized form and have the designated broker confirm it was executed.
- Designated agency does not erase confidentiality between the agents. Sam's knowledge of Priya's ceiling and her August 15 deadline stays with Sam. Ana may not learn it, use it, or hint at it, and Sam may not use it to pressure Priya.
- If either client declines to consent, one side must be referred out (with written agreement on any referral compensation) or the brokerage must withdraw from one side.
- Document the consent dates, the delivery method, and what was and was not disclosed.
2. Dale insists: "You work for me - tell me what Priya can pay." How should Ana respond, and what may she legitimately tell him?
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She must refuse the number and redirect the conversation to objective advice.
- Even in a limited dual agency, neither client's confidential information is available to the other. Price ceiling, motivation, personal deadlines, and financial condition are all confidential.
- What Ana can do is serve Dale's interest with analysis: net proceeds at each price after payoff, commission, seller concessions and prorated taxes; the risk that a $495,000 no-contingency offer may actually close faster; the market data supporting his list price.
- Suggested language: "I can't obtain or use that information, and any agent who gave it to you would be breaching a duty to their own client. Here is what each offer nets you and what each risks."
- If Dale keeps pressing, Ana should decline again in writing and consider whether she can continue representing him. She should notify the designated broker.
- A seller who later learns his agent traded the other side's confidences has a license complaint and an agency claim, not just hurt feelings.
3. Dale decides to counter Priya. What must Ana do about the competing $495,000 offer, and what may she not say or do?
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Present both offers fully, advise on terms, and keep the two files separate.
- Disclose both offers to Dale in writing with all terms, including the $495,000 offer's 21-day close and lack of contingencies. Dale decides.
- Ana may tell the other buyer's agent only what Dale authorizes her to disclose (e.g., "the seller has multiple offers and is asking for highest and best by 5 p.m. Thursday"). If she makes that request, she must make it of all interested buyers consistently.
- She may not state or imply that offers exist when they do not, inflate a competing price, or hint at Priya's ceiling by countering at exactly $505,000. A false statement about another offer is a misrepresentation and a license problem.
- She should counsel Dale on risk: a counter at the buyer's exact ceiling telegraphs that Ana knows the ceiling. A defensible counter based on market data achieves the same result without revealing anything.
- Advise Dale to keep the $495,000 offer alive with a deadline rather than rejecting it while he negotiates.