Cousin Buyer and the Seller's Bottom Line
Broker A holds an exclusive-right-to-sell listing at $489,000 on a single-family home; the listing expires in 60 days. Agent R, who works in Broker A's office, has a signed buyer-agency agreement with her cousin, whose budget is $480,000. During a showing, the cousin asks R, 'You know the seller-what is the lowest number they will take?' The seller previously told R, in confidence, that $455,000 would be acceptable and that a divorce filing is imminent. The cousin also asks whether the seller is 'getting divorced.' The brokerage has no written designated-agency policy.
1. Identify the agency relationships in this brokerage and explain whether R can represent the cousin.
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R's buyer-agency agreement creates a fiduciary relationship with the cousin. Broker A's listing creates a fiduciary relationship with the seller. If R personally represents both, that is dual agency; Rhode Island requires informed written consent from both parties before dual agency. If the brokerage uses designated agency, another licensee could be designated for the buyer, but that requires a written office policy and disclosures. Because R is related to the buyer, the conflict must be disclosed. If consent is not obtained or the brokerage cannot designate, R should refer the cousin to another brokerage or have the cousin proceed without representation after proper disclosure.
2. How should R respond to the buyer's two questions?
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R cannot answer either question with the seller's confidential information. The seller's bottom line and divorce plans are confidential facts that could harm the seller's bargaining position. R may say: 'I can't disclose the seller's private information; I can show you comparable sales and help you decide your strongest offer.' R may not hint at the divorce or use it to pressure the seller. If the seller later authorizes disclosure in writing, R may disclose the specific authorized fact.
3. What steps should Broker A take before any offer is written?
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Before writing an offer, Broker A should: (1) provide the Rhode Island agency disclosure form and document receipt; (2) obtain the buyer's written consent to dual agency or designate another agent or refer the buyer; (3) disclose R's family relationship in writing; (4) confirm in writing that seller confidential information will not be shared; (5) have the buyer sign a buyer-agency agreement if not already done; and (6) keep a file record of all disclosures. The broker should also decide whether office policy permits dual agency at all.