Same-Firm Buyer and the Seller's Hidden Price Floor
Marta lists her Sioux Falls house at $349,000 with Dana, the listing licensee at a mid-size brokerage that uses one supervising broker for every licensee in the office. In the listing appointment Marta says she will not accept less than $330,000 and must close by December 15 because her employer's relocation buyout expires that day. Rob, Dana's colleague in the same office, brings a buyer who offers $322,000 with a December 12 closing. Later that week Rob tells the office manager, within Dana's hearing, that his buyer would "probably stretch to $342,000." That afternoon Rob asks Dana, "What will Marta really take?" An hour later Marta calls Dana and asks, "Do you think this buyer would go higher?"
1. Rob asks Dana what Marta will really take. What may Dana disclose, and why?
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Nothing about Marta's $330,000 floor, her relocation deadline, or her motivation. Those are confidential facts obtained within the agency relationship, and the duty of loyalty and confidentiality bars a licensee from using them to the client's detriment or revealing them without authorization.
Dana may share:
- Property condition and material facts (the standard disclosure duty runs to all parties).
- Publicly available data: list price, days on market, tax records, comparable sales.
- Procedural information about how offers are presented.
She may not coach Rob with statements like "come in at $335,000 and she'll sign," which is the same leak in softer language.
Key test point: the buyer's status does not change Dana's obligation. The buyer in this scenario is a customer of Dana's brokerage (or, at most, a client of a colleague), and the seller is Dana's client. Confidentiality is owed to Marta regardless of who is asking. Assist Rob by pulling comps and running a buyer-side market analysis instead.
2. Does Rob's buyer representation in the same office create a dual agency, and what must happen before the parties proceed?
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Yes. When two licensees of the same brokerage represent opposing parties in the same transaction, the brokerage is representing both principals. That is dual (limited) agency, and it must be disclosed and consented to in writing by both parties before the brokerage acts for both. Confirm the exact agreement and consent language against the current text of SDCL ch. 36-21A and the Commission's administrative rules (ARSD 20:69), plus office policy.
Practical sequencing matters:
- Disclose the situation to Marta and to Rob's buyer immediately, before any further confidential information is exchanged.
- Obtain signed informed consent from both, or decline to proceed.
- If consent is refused, the cleanest fix is a referral of one side to a different brokerage - a referral fee or a release must be handled consistent with the brokerage agreement and the employing broker's approval.
What consent does not buy: even with valid dual-agency consent, neither client's price floor, motivation, or negotiating ceiling may be revealed to the other side. Dual agency limits advocacy; it does not authorize betrayal of either client. Also note that if the same supervising broker oversees both licensees, an internal "wall" between Dana and Rob is difficult to defend as truly separate representation - say so plainly rather than promising confidentiality the office cannot deliver.
3. Marta asks whether the buyer would go higher. How should Dana respond, and what can she legitimately offer instead?
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Dana cannot answer the question with Rob's overheard $342,000 ceiling. The buyer is a client of the same brokerage, and Dana has actual knowledge of his negotiating limit; using it to push Marta's counter upward would be a breach of the duty owed to that buyer, and disclosing it would be a breach of confidentiality. The fact that Dana learned it accidentally is irrelevant - the duty attaches to the information, not to how it arrived.
Appropriate response: explain that she cannot discuss the other party's position, and redirect to legitimate leverage:
- Comparable sales and current competing inventory to justify a counteroffer.
- The buyer's offer terms: financing type, down payment, appraisal-gap exposure, closing date, and contingency length.
- Marta's own risk: her December 15 deadline is 9 days after the buyer's requested closing, which is tight if financing stalls.
Dana can advise a counteroffer (for example, $338,000 with a December 10 closing and a shortened financing contingency) without revealing anything confidential. If Marta presses and asks Dana to "just tell me," Dana should decline and document the conversation in the file. Note also that confidentiality duties continue after the transaction closes or the listing expires.