Open House Confidences: Seller Motivation and the Unrepresented Buyer
Priya, a provisional broker with Cedar Ridge Realty, is sitting an open house on her firm's listing for seller Douglas. The list price is $415,000. Douglas told Priya in confidence that a job transfer forces him to close by August 15 and that he would accept $390,000. Buyer Marcus arrives alone, tours for 40 minutes, signs nothing, and says: 'I'll pay full price if you tell me the seller's bottom line and help me structure the offer so I come out ahead. And can you shave a point off your commission to cover my closing costs?' Priya's broker-in-charge is out of the office until Thursday. Marcus wants the offer written tonight.
1. Identify the agency relationships in play, what Priya must deliver before any further substantive discussion, and what she may not say.
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Relationships: Priya is a provisional broker acting for Cedar Ridge Realty, and the firm's written listing agreement makes it Douglas's agent. Marcus is a customer, not a client, until something is signed.
Before further discussion: Priya must give Marcus the Working with Real Estate Agents Disclosure at first substantial contact (a 40-minute tour followed by a request to write an offer is well past that point) and explain in plain terms that the firm represents the seller. She must also note that she practices only under her broker-in-charge's supervision.
What she may not say: Douglas's transfer deadline and his $390,000 floor are confidential information acquired through the agency. Disclosing them to Marcus would breach loyalty and give the seller a concrete claim of harm. She also cannot use the information indirectly, e.g., by hinting that 'the seller is motivated' or that an offer 'well under list' would be well received.
What she may say: Facts about the property, its condition, and public information, plus an honest answer that she cannot discuss the seller's motivation or negotiating position.
2. Marcus asks Priya to advise him on what price and terms to offer and to reduce the commission to cover his closing costs. May she do either?
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Advice on price and terms - no. Without a buyer agency agreement, Priya owes Marcus honesty and fairness, not advocacy. Recommending a number, ranking his negotiating options, or telling him which contingencies to waive would be representation of a buyer by the seller's agent. If the firm is to advise him, it must become a dual agent, which requires the informed written consent of both Douglas and Marcus (and firm-level involvement of the broker-in-charge); a dual agent then must be neutral and still may not use one side's confidences against the other.
Commission reduction - not her call and not from him. The commission is set by the firm's contract with Douglas; a provisional broker has no authority to modify it, and the broker-in-charge is out of the office. If Marcus wants seller-paid closing costs, the correct route is a written request in the offer that Douglas accepts - it changes the net, so Douglas decides. Separately, Priya may not accept compensation from Marcus for helping him buy this house without full disclosure and consent of the parties; quietly taking a fee from the buyer while her firm represents the seller is exactly the conflict the disclosure rules exist to prevent.
Bottom line: write the offer at Marcus's direction, present it promptly, and route both requests to Douglas and the broker-in-charge.
3. Marcus says he wants Priya to represent him in buying this house. Set out the lawful paths and the constraints on each.
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Path 1 - he hires a different firm. Cleanest option. Marcus signs a buyer agency agreement with another firm, which becomes his agent and can advise him fully, including on price. Cedar Ridge stays the seller's agent; Priya must cooperate in showings and respond to the offer, and she still may not reveal Douglas's confidences.
Path 2 - he signs with Cedar Ridge, making the firm a dual agent. NC permits this only with the informed written consent of both buyer and seller. Requirements: written consent from Douglas and Marcus; the broker-in-charge must be involved in establishing and supervising the dual agency; the firm must be neutral; and information learned from one party may not be used to the detriment of the other. Priya's existing knowledge of Douglas's floor becomes a live problem - a dual agent cannot let that leak into Marcus's offer strategy.
Path 3 - designated agency within the firm. If the firm designates one broker to represent Douglas and another to represent Marcus, the designated agents owe full duties to their own principals, and the firm's other brokers must not share either side's confidences. Priya should not be the broker on both sides of the same negotiation.
Practical constraint: none of this happens by implication. Until a written agreement and consents exist, Priya is the seller's agent and must tell Marcus so.