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
