In Texas real estate, an intermediary is a real estate broker who represents both the seller and the buyer in the same transaction. This situation can arise when a buyer is interested in purchasing a property listed by the same brokerage they are working with.
Here’s a breakdown of how intermediary status works:
What is an Intermediary?
An intermediary situation occurs when:
The buyer and the seller are both represented by agents who work for the same brokerage.
The broker and the agents involved must remain neutral and fair to both parties.
How Intermediary Works:
Single Brokerage Representation:
If a buyer wants to purchase a property listed by the same brokerage that represents them, the broker becomes an intermediary.
Limited Agency:
The broker (and their agents) cannot fully advocate for either the seller or the buyer. Their role is to facilitate the transaction fairly without favoring one side.
The broker cannot offer advice or negotiate on behalf of one party over the other. For example, they can’t suggest a price to the buyer or advise the seller on whether to accept an offer.
Disclosure Requirements:
The broker must obtain written consent from both the seller and the buyer to act as an intermediary. This disclosure will typically include a description of the limitations on the broker’s role in the transaction.
The intermediary relationship must be clearly disclosed to both parties, ensuring that both the buyer and the seller understand that the broker is acting as a neutral party.
Two Types of Intermediary Relationships:
Intermediary with Appointments: If the broker assigns separate agents within the brokerage to represent the buyer and the seller, these agents can still offer advice and negotiate, but only on behalf of their respective clients. This is known as an "intermediary with appointments."
Scenario:
Broker/Listing Agent: Jane Doe is the broker and also the listing agent for a property at 789 Pine Street. She has a signed listing agreement with the seller, Mr. White, to help him sell his home.
Buyer’s Agent: ABC Realty, Jane’s brokerage, also has an unrepresented buyer, Mr. Black, who is interested in purchasing the property at 789 Pine Street.
Step-by-Step Process:
Listing the Property:
Jane Doe, acting as both the broker and the listing agent, lists Mr. White’s property at 789 Pine Street. She handles all the initial steps, including marketing the property and advising Mr. White on pricing and selling strategies.
Buyer’s Interest:
Mr. Black, who does not yet have representation, expresses interest in purchasing 789 Pine Street. Because Jane is already the listing agent for the seller, this creates a situation where a potential conflict of interest could arise if Jane were to work directly with both parties.
Intermediary Status and Assigning Agents:
To avoid a conflict of interest and to comply with Texas law, Jane decides to act as an intermediary with appointments.
Jane appoints two agents from her brokerage, ABC Realty:
Agent A (Seller’s Appointed Agent): Agent A is appointed to continue working closely with the seller, Mr. White, to maintain his interests in the sale.
Agent B (Buyer’s Appointed Agent): Agent B is appointed to represent the buyer, Mr. Black, in purchasing the property.
Disclosure and Consent:
Jane must disclose to both Mr. White (the seller) and Mr. Black (the buyer) that she will be acting as an intermediary and that Agent A will represent the seller, while Agent B will represent the buyer.
Both parties must provide written consent to this arrangement, acknowledging that Jane is now acting in a neutral capacity as the intermediary.
Roles of the Appointed Agents:
Agent A (Seller’s Appointed Agent): Agent A takes over the responsibilities of representing Mr. White, the seller. This includes advising him on offers, negotiating terms, and helping him get the best possible deal for his property.
Agent B (Buyer’s Appointed Agent): Agent B is now responsible for representing Mr. Black, the buyer. Agent B helps Mr. Black with making offers, negotiating terms, and ensuring his interests are protected in the transaction.
Broker’s Role as Intermediary:
Jane Doe (Intermediary Broker): As the intermediary, Jane remains neutral and oversees the transaction to ensure both parties are treated fairly. Jane no longer directly advocates for Mr. White but instead monitors the process to make sure everything is conducted ethically and according to the law.
Jane cannot give advice or make decisions that would favor either party. Her role is to facilitate communication and ensure the transaction proceeds smoothly.
Negotiation and Closing:
Agent A works with Mr. White to review and negotiate offers from Mr. Black.
Agent B works with Mr. Black to craft offers and negotiate terms with Mr. White.
Jane remains in a neutral position, ensuring that neither side is unfairly advantaged or disadvantaged during the negotiation and closing process.
Key Points in This Example:
Broker as Listing Agent: Jane initially represents the seller but becomes an intermediary when a buyer within her brokerage is interested.
Appointed Agents: Agent A is appointed to represent the seller, and Agent B is appointed to represent the buyer.
Neutral Broker: Jane, as the intermediary, does not take sides and ensures a fair process for both parties.
Written Consent: Both the buyer and seller must agree in writing to this intermediary with appointments arrangement.
Summary:
In this example, Jane Doe, the broker, starts as the listing agent for the seller, Mr. White. When an interested buyer, Mr. Black, comes along, Jane switches to an intermediary role and appoints Agent A to represent the seller and Agent B to represent the buyer. This setup allows each party to have dedicated representation while Jane oversees the transaction in a neutral capacity.
Intermediary without Appointments: If no separate agents are appointed (for example, if the same agent represents both the buyer and the seller), then the agent must remain completely neutral and cannot offer advice to either party.
Scenario:
Broker/Listing Agent: Jane Doe, who works for ABC Realty, has listed a property for sale at 123 Maple Street. Jane has a signed listing agreement with the seller, Mr. Smith, to help him sell his home.
Buyer: John Johnson is interested in purchasing the property at 123 Maple Street. John has not yet hired a buyer's agent and decides to reach out directly to Jane Doe, the listing agent, to view the property.
Step-by-Step Process:
Initial Contact:
John contacts Jane to schedule a showing of the property. Jane, as the listing agent, shows him the house and provides general information about it.
Interest in Purchase:
After viewing the home, John decides he wants to make an offer on the property. However, since Jane is already representing the seller, Mr. Smith, in the transaction, this creates a potential conflict of interest if Jane were to represent both parties.
Disclosure of Intermediary Status:
Jane informs both John and Mr. Smith that if she is to assist both parties in this transaction, she would need to act as an intermediary without appointments. This means Jane would be neutral and not represent either party in a traditional sense. She would facilitate the transaction without offering advice or advocating for either side.
Written Consent:
Jane must obtain written consent from both Mr. Smith (the seller) and John (the buyer) to act as an intermediary without appointments. Both parties must acknowledge and agree to this arrangement, understanding that Jane’s role will be limited.
Facilitating the Transaction:
As the intermediary, Jane helps John submit his offer to Mr. Smith. However, Jane does not advise John on what price to offer or what terms to include. Similarly, she does not advise Mr. Smith on whether to accept, counter, or reject the offer.
Jane’s role is to facilitate the communication between John and Mr. Smith and ensure that all necessary paperwork is completed correctly.
Neutral Role:
Throughout the transaction, Jane remains neutral. She does not provide either party with information that could give one side an advantage. For example, she cannot disclose to John that Mr. Smith is in a hurry to sell and might accept a lower offer, nor can she tell Mr. Smith that John is willing to pay more than his initial offer.
Closing the Deal:
Jane continues to act as a facilitator throughout the process, helping with things like coordinating inspections and ensuring that the paperwork is in order for closing. She remains neutral and does not take sides.
Key Points in This Example:
Neutrality: Jane does not advocate for either the seller or the buyer. Her role is purely facilitative.
No Advice: Jane cannot offer advice on pricing, terms, or negotiation strategies to either party.
Written Consent: Both the seller and buyer must agree to this intermediary arrangement in writing.
Facilitator Role: Jane ensures the transaction moves forward smoothly, but she does not provide confidential information or advice that could benefit one party over the other.
Summary:
In this example, Jane Doe, as the broker and listing agent, acts as an intermediary without appointments. This means she is neutral, facilitates the transaction, and cannot offer advice or take sides. Both the buyer and seller have agreed in writing to this arrangement, understanding the limitations of Jane’s role in the transaction.
Responsibilities of the Intermediary:
The intermediary must ensure that all parties are treated fairly and that the transaction is conducted with honesty and integrity.
The broker is still responsible for disclosing known material facts about the property but cannot disclose confidential information that would disadvantage one party (like the lowest price the seller would accept or the highest price the buyer would pay).
Key Points to Remember:
Neutrality: The intermediary broker and agents must stay neutral, without favoring either the buyer or the seller.
Disclosure and Consent: Both parties must be informed and agree in writing to the intermediary relationship.
Limited Advice: The level of advice and advocacy the agents can provide is limited depending on whether there are appointments.
Summary:
In an intermediary situation in Texas real estate, a broker represents both the buyer and seller in the same transaction. The broker must act as a neutral party, ensuring fair treatment of both sides. The broker’s ability to advise either party is limited, especially if the same agent represents both parties. The goal is to facilitate the transaction without any conflicts of interest, maintaining a balance between the interests of both the seller and the buyer.
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