Unrepresented Buyer, Seller Agency, and a Confidential Price Ceiling
Mei is a salesperson at Cedar Realty. She signed an exclusive right-to-sell listing with seller Omar at 4% commission, with a clause allowing the broker to offer buyer-side services. Buyer Priya tours with Mei, unrepresented, and says, “I’ll pay up to $620,000, but don’t tell Omar.” The list price is $575,000. Priya asks Mei to write an offer at $560,000 with a $10,000 earnest-money deposit and a 21-day financing contingency. Cedar’s policy permits designated agency, but the brokerage has no signed buyer-agency agreement with Priya; state law requires written agency disclosure at first substantive contact but does not require a buyer agreement. Mei’s colleague, Dan, represents a different buyer who is also interested in the property. Mei wants to present Priya’s offer and keep the $620,000 ceiling confidential.
1. Identify the agency relationships and the disclosures Mei must make before drafting any offer for Priya. Does Priya’s $620,000 ceiling have to be kept confidential?
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Mei and Cedar are Omar’s agents; that is the only written agency relationship in the file. Priya is a customer, not a client, unless she signs a buyer-agency agreement. Dan’s buyer is a separate client of the same brokerage, so designated agency may be available only with the brokerage’s written consent and safeguards. Before substantive contact, Mei must give the required agency disclosure and explain that she represents the seller, not Priya. Because Priya has not hired Mei, Mei should not solicit or use Priya’s confidential financial ceiling as if she were Priya’s agent. The cleaner course is to tell Priya that Mei represents Omar and cannot keep buyer confidences unless Priya signs an agency agreement or the brokerage consents to a disclosed dual/designated arrangement. If Priya insists on confidentiality without an agency relationship, Mei should decline the information and refer her to independent counsel or another agent. The $620,000 ceiling is not a term Mei may reveal to Omar; presenting a $560,000 offer is proper, but using the ceiling to pressure Priya or disclosing it to Omar would breach confidentiality and fair dealing.
2. Can Mei draft Priya’s offer? What conflict and competence issues arise?
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Mei may usually fill in a form at Priya’s direction as a ministerial act, but she cannot give legal advice or advocate for Priya while she represents Omar. Drafting a buyer’s offer is more than clerical if Mei selects terms, advises on contingencies, or negotiates price. It creates an implied-agency or dual-agency risk, and Cedar’s designated-agency policy does not by itself authorize Mei to act for Priya. Mei should first obtain written consent from all affected parties or route Priya to an independent agent or attorney. She must also avoid using information from Omar to help Priya and avoid using Priya’s information to help Omar. If she proceeds, document that she is not Priya’s agent, that Priya was advised to seek independent advice, and that Mei’s duty of loyalty runs to Omar. The safest exam answer: do not draft as Priya’s advocate without consent; offer clerical assistance only.
3. How should Mei handle Dan’s buyer’s competing interest and the presentation of Priya’s offer?
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Cedar must present all written offers promptly and objectively to Omar unless the seller instructed otherwise in writing. Mei should not disclose Priya’s offer terms to Dan’s buyer or Dan’s buyer’s terms to Priya. If designated agency applies, Dan and Mei should maintain separate files and not share confidential information. If the brokerage instead acts as a dual agent, all clients must consent in writing and the broker must not advocate for one side over the other. Mei should deliver Priya’s offer with a cover note stating that Priya is unrepresented and that Mei represents Omar, and she should let Omar decide. She should not tell Omar “Priya will go to $620,000.” She should also document the sequence of disclosures and communications.