Intermediary Brokerage (Unit 6)

Intermediary Brokerage

a broker may act as an intermediary between parties to a real estate transaction if the broker obtains in written consent from each party, and that states the source of any expected compensation to the broker; intermediary should act fairly and impartially

Appointment process

ability of broker to make appointments is the key difference between the old, now illegal statutory dual agency and the current intermediary status prescribed by TRELA; appointed licensees may give opinions and advice

broker as principal

brokers should be alert to dual agency when they or their associates or employees buy or sell property for their own accounts

unintended dual representation

can become undisclosed dual agency which is a serious problem example: listing broker or licensed associate represents both the buyer and seller or separate associates from the listing office represent the buyer and the seller

prior relationships

can result in a dual representation; if represent a seller but know a buyer you've worked with before that they might want it

concerns related to intermediary practice

confidentiality, negotiation; can cause ethical and legal issues

in-house sale

employing broker has become an intermediary or undisclosed dual agency through the conduct of the two salespersons; two salespersons of same firm represent buyer and the seller

volatile issues with dual agency

if buyer or seller becomes unhappy, usually there becomes problems with dual agency

adopting the buyer

if no other broker is involved, listing agent spends a good deal of time with the buyer both before and after the contract is signed; situation where agent "adopts" a buyer during the closing process and agrees to list, develop, or perform other acts for a property

intentional dual representation

less risk, written consent

status of intermediary brokers and appointed licensees

offer limited form of representation to parties,certain fiduciary duties are imposed on the agent, no provision for a broker to "opt out" of an agency relationship as an intermediary; duties: conditional nondisclosure, honesty, and compliance with the License Act

Conflicting positions in representing More than One party in a transaction

seller and buyer have conflicting interests: buyer wants lowest price, and seller highest

nonagency

some states provide non agency status for real estate licensees who may provide real estate services as transactional brokers, facilitators or middlemen

cooperating or other broker

the "other broker" in the transaction often acts as the agent of the buyer in negotiations to acquire a property listed in an MLS

Common law dual agency

with implied agency, this can become an issue if it is undisclosed because the relationship is unclear to the broker; needs to be disclosed and consensual

Specialized intermediary applications

1. exchanges: some brokers help owners exchange properties 2. syndications (pooled $ for RE investments): problems can arise when general partner is also a broker 3. commercial leasing agent: can be in the center of negotiations between owner and lessee, need make sure all understand roles