Intermediary Status When the Same Brokerage Represents Both Sides
Linda is the designated broker at Lone Star Realty and has an exclusive right-to-sell listing on 412 Mesquite Ln at $425,000. Her brokerage also represents buyer Marcus through agent Raj. Marcus tells Raj he will offer $410,000, is preapproved to $440,000, and absolutely will not exceed $430,000. Marcus also says he is divorcing and must close in 14 days. Seller asks Linda, "Is the buyer maxed out? Can we counter at $435,000? Why is the buyer in such a hurry?" No intermediary consent has been signed. Linda wants to keep both clients and close the deal.
1. What must Linda do before acting as an intermediary, and what may she disclose to the seller about Marcus's maximum price, preapproval, and divorce?
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Linda cannot act as an intermediary until the brokerage obtains written consent from both the seller and the buyer. The consent should disclose that the brokerage represents both parties as an intermediary and will not advocate for either party. Until signed, the brokerage may represent only one side; the other party must be referred to another brokerage or the listing/buyer representation must be terminated.
Even with consent, Linda may not disclose Marcus's $430,000 ceiling, his $440,000 preapproval, or his divorce motivation. Those are confidential facts learned through the brokerage relationship. She may discuss the offer terms, property condition, and the fact that a buyer is preapproved only if doing so does not reveal confidential financial details. She should advise the seller to counter based on the seller's own objectives and market data, not on Marcus's private maximum.
2. Seller says, "If you won't tell me their max, you're not being loyal to me." How should Linda explain her duties as an intermediary?
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Linda should explain that intermediary status is not dual agency with full advocacy for both sides. Under Texas law the broker must treat both parties impartially and may not use one party's confidential information to benefit the other. Loyalty does not mean disclosing Marcus's private financial limits.
If the seller insists on undivided loyalty and confidential advice, the brokerage cannot continue representing both parties. The seller may terminate the listing, or the brokerage may release the buyer to another broker. Linda should document the conversation and the parties' choices.
3. Marcus tells Raj about the divorce and the 14-day closing need. Seller later asks why the buyer wants a fast closing. What should Raj and Linda say?
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Raj and Linda must protect Marcus's confidential reason. They may state the contract term-that the buyer requested a 14-day closing-without disclosing the divorce. The seller is entitled to know the terms of the offer, not the buyer's private motivation.
If the seller wants assurance, the buyer can provide a lender preapproval letter or proof of funds. The brokerage should not use the divorce as leverage in negotiations, because that would breach the duty of confidentiality owed to Marcus.