I am selling a house. My realtor, who is also a personal friend, has been approached by a potential buyer that isn't currently represented. If the unrepresented buyer comes in with the best offer my listing agent becomes an intermediary. I don't know what I don't know when it comes to this situation, so any advice would be helpful. Should I be concerned? Is there any potential issue I need to be weary of considering that my listing agent is also a friend (from the buyer side)?
I trust my buddy (the list agent), but if I'm paying the commission I don't know how I feel about essentially losing representation that is explicitly looking out for my best interest.
Thanks for your feedback!
It depends on the situation - sometimes the unrepresented buyer is intentionally unrepresented with the intent to try and gain a discount by not having a rep. I have dealt with this before with attorneys that aren't members of the MLS for example. Ultimately - your listing agreement will dictate the plan of action. If the other party doesn't want to be represented - your agent does not have to go into intermediary status and can simply register that buyer as an unrepresented buyer (or a customer) and exclusively represent you. TAR has a quick note on it here. Your agent should register them as a customer and explain to that third party that they do not have representation in that place.
@Austin Stowell , I think I missed an important part. The unrepresented buyer wants my agent to represent him too.
Then he’s not your friend if you have to come here. Or even someone you trust as a professional. When it comes to business, it’s business and straight to the point for me.
This isn't even allowed at my brokerage. You should get advice from your lawyer on these legal matters as I am not legally qualified or authorized to give legal advice. There is no possible way to represent both of you and serve both of your interests fairly. Our first responsibility is to be a fiduciary to our clients. There are so many conflicts of interest I can't even list them. The way we handle it at my brokerage is to have the buyer be represented by a different agent at the same office, under the same broker. The intermediary relationship is between the BROKER and the two agents. intermediary between the listing agent, seller AND buyer isn't even a thing. There is an intermediary relationship notice that must be signed by both the agents, broker, buyer AND seller. Your listing agent can legally receive a referral fee from the buyer's agent commission for giving him the lead. Also, the commission amounts in the MLS are legally binding.. if it's 3% to the buyer's agent in the contract and on the MLS that is the legal, agreed upon amount and it cannot be changed without another written agreement from the parties. Am I emphasizing this enough? I'm sure your buddy is a great agent with great intentions. These things work out fine off docusign as long as nothing goes wrong, but if something goes wrong (which all those lawsuits that led to these rules attest to), you're going to really wish you had it signed in docusign!
He cannot represent both sides. Intermediary status is totally legal however he cannot advise either side. It is fine if both parties are fully capable and knowledgeable parties. A good example is if a developer is buying land from another developer and both are knowledgeable in the field. The best thing would be for your agent to represent you, find a 3rd party to represent the buyer. Your agent can indeed receive a referral fee of any amount they choose for the buyer's agent to take on that role. I've done this before for colleagues in this position so that bother parties have capable representation.
Intermediary is allowed in Texas but dual agency is not. The listing agent cannot represent both sides of the transaction (dual agency) but the brokerage can (intermediary).
If you don't feel comfortable you do not have to allow intermediary. Have them represent you only.
In most cases I don't think it is that big of a deal, although before getting in the business I was very concerned.
In intermediary your agent cannot tell the buyer you will take less than asking, but on the flip side they cannot tell you the buyer will pay more than they offer. To me this is pretty common anyway. Let's say you listed for $350,000, did you tell your agent you would take less than $350,000 already? Normally no buyer tells us....let's offer $340,000, but I am willing to pay $360,000. It could happen, but for me it is unusual.
If you don't allow you can advise your agent to get the buyer another agent....and not allow intermediary. For your agent it can be a bit tough.....how does he get the lowest price for the buyer they represent and also the highest price for you? Also it is not all about price. What happens when the buyer wants repairs, or cannot close on time, or there is some other big issue....in intermediary in my opinion they cannot always fight for you, just present the situation and let you decide how you want to proceed.