Both Sides in the Same Firm: Whose Number Is It?
Broker Kim's firm, Crescent Realty, holds an exclusive listing on a $445,000 Metairie townhouse. Buyer Priya signed an exclusive buyer representation agreement with Crescent three weeks ago. Priya tours the townhouse with Kim's associate Aaron and says, 'I'd pay $420,000 cash, quick close, but I'd never tell the seller that.' The next day the seller tells Kim, 'I'm relocating in 60 days and I'd take $400,000.' Aaron, excited, wants to tell Priya the seller's number and write a $400,000 offer for her, while Kim calls the seller to say 'we have a strong buyer at $420,000.' Neither party has signed anything about dual representation.
1. Can Crescent Realty represent both Priya and the seller in this transaction? What must happen first?
Read the worked answer
Technically yes, but not yet. Louisiana permits a firm to represent both sides of a transaction only with the informed, written consent of both parties, obtained through the required agency disclosure and consent documents.
Crescent is already in an in-house conflict: Priya is a client under a written buyer agreement and the seller is a client under the listing. Before Kim or Aaron facilitate a deal between these two clients, both must be told, in writing:
- the firm now owes duties to both and its loyalty is neutral, not exclusive;
- the firm cannot advocate solely for either party on price or terms;
- confidential information will not be passed between them;
- each party may and should consider independent advice.
Until both consent in writing, the firm should pause the dual role and manage confidentiality as described in the next task.
2. What may Aaron and Kim say to each side before and after any dual-agency consent?
Read the worked answer
The two facts in play: Priya's $420,000 ceiling and cash/quick-close posture; the seller's $400,000 floor and 60-day relocation deadline.
Before consent: the firm is a fiduciary on both files at once, which is why consent is needed. Neither licensee may tell Priya the seller's $400,000 floor, and neither may tell the seller 'the buyer will go to $420,000.' Doing either would use one client's confidential information to the other's detriment.
After consent: dual agency does not dissolve confidentiality; it just means the firm cannot use either party's confidences against the other. Aaron still may not disclose the seller's bottom line to Priya absent the seller's express authorization. If the seller says 'tell her I'll take $400,000,' that specific fact may be relayed, because the seller authorized it.
What Aaron can do: advise Priya on value using comparable sales, inspection findings, and her own objectives, and let her decide her offer. What Kim can do: present the offer and the seller's options. Neither may 'work' the other side's number.
3. The seller refuses to consent to dual agency. What are Crescent's options, and what duties survive?
Read the worked answer
Options:
- Keep the seller, release the buyer. Obtain Priya's written agreement to terminate the buyer representation (and, if applicable, refer her to another brokerage, with any referral fee paid broker-to-broker, never to an unlicensed person).
- Keep the buyer, exit the listing. If the listing agreement allows termination, cancel it in writing and let the seller engage another firm - with the seller's informed consent to the timing.
- Keep the buyer and deal with an unrepresented seller. The seller may choose to proceed without representation; the firm must then be scrupulously honest and fair, disclose all material facts, and avoid giving the seller advice or implying it represents him.
Never: proceed with both as clients without written consent.
Duties that survive: confidentiality of information learned during the representation continues after the relationship ends. Aaron may not later use Priya's $420,000 ceiling against her, and Kim may not use the seller's $400,000 floor against the seller in a subsequent negotiation.