Two Buyers Under One Roof: Structuring an Intermediary File
Dana is the designated broker of Cedar Oak Realty, a brokerage with 14 agents. She has a listing at 1420 Willow Bend priced at $485,000. The seller privately told Dana he would accept $455,000 but does not want that number shared with anyone. Marcus, a Cedar Oak agent, represents buyers who intend to offer $460,000. A week later Priya, another Cedar Oak agent, brings a second buyer who also wants to write on the property. Dana would like to keep both buyers in-house and act as intermediary; the seller has already said verbally that he is fine with it. Nobody has signed anything yet. Dana asks how to structure the file so both offers can be presented and both buyers represented without a licensing complaint.
1. What must happen before Dana may act as intermediary, and can she personally represent the seller while Marcus represents his buyers?
Read the worked answer
Before acting. Dana must obtain written consent from every party - the seller, Marcus's buyers, and Priya's buyer - before she does anything in an intermediary capacity. Oral consent from the seller is worthless. The written consent must state that the broker will act as intermediary and whether licensees will be appointed. The Information About Brokerage Services form must also have been delivered at first substantive communication, and the file should show it.
Appointments. Acting as intermediary, Dana must put her appointments in writing and deliver them to the parties. Marcus is appointed to represent his buyers. Dana may appoint herself to represent the seller only if that appointment is in writing and disclosed; many brokers instead appoint a third licensee so the broker stays neutral. If Dana does appoint herself, she owes the seller full fiduciary duties and cannot receive or relay Marcus's clients' confidences.
Priya's buyer. The brokerage cannot represent a second buyer against its own seller-client. Priya's buyer should be told in writing that the office represents the seller, that the buyer is a customer and not a client, and should be advised to obtain separate representation.
2. Marcus asks whether he can tell his buyers that the seller will take $455,000. What is the answer, and what may Dana do with that information?
Read the worked answer
No. The seller's bottom line is confidential information obtained during the agency relationship. Marcus may not disclose it, hint at it, or coach his buyers toward it without the seller's written authorization. Disclosing it would be a breach of the duty of loyalty and a TREC rules violation, and it would also injure the seller by destroying his negotiating position.
Dana, as the seller's appointed agent, may use the information to advise her own client - for example, counseling him to counter at $470,000 rather than accept $460,000 - because it belongs to him. What she may not do is use Marcus's buyers' confidences against them, such as telling the seller the exact ceiling the buyers have authorized. If Dana has not appointed herself to the seller, she may not give either side that kind of advice at all; she can only pass information between the parties.
3. Both offers arrive the same afternoon. Describe how Cedar Oak must handle presentation, and what Dana may and may not tell each buyer about the other offer.
Read the worked answer
Presentation. Every offer must be presented promptly and objectively to the seller, who alone decides. The broker should not rank, delay, or steer offers to favor one in-house buyer, and should document the time each offer was received and presented.
Disclosure limits. Dana may not reveal the terms of one buyer's offer to the other buyer without that buyer's written authorization. She may, however, carry out an instruction from the seller - the seller's information is his to disclose - such as telling both buyers that multiple offers exist and inviting highest and best. Get that instruction in writing.
Impartiality. As intermediary, Dana must treat both buyers honestly and fairly while not favoring either. Marcus and Priya each owe their own clients full advocacy, but neither may share the other side's confidential data with their client. Marcus also should not tell his buyers what Priya's buyer offered.