Intermediary in Texas - It's not only what you say... but how you say it!

I keep hearing people talk about representing both sides in a transaction and nothing makes me cringe more. In Texas, we got rid of dual agency in the 1990s and we replaced it with Intermediary. What this means is that an individual agent/broker/associate can NEVER and I mean NEVER represent both sides in a transaction. We all need to be clear in our understanding, our explanations and in the words we choose as practitioners.  As for consumers, everyone needs to understand that the agent or broker represents the seller or the buyer but never both.  The agent or broker can facilitate the transaction, however where an agent facilitates the transaction they do not represent either party.

Intermediary in TexasWith Intermediary, there are two ways it can be handled: (1) with appointments and (2) without appointments.

(1) Intermediary With Appointments occurs when a broker appoints two separate associates to represent each side independently. One associate is appointed to represent their client and by all means, can provide advice and opinions to their client. The broker has to be neutral and make sure each agent is representing their client.

If you are in a brokerage with just you and the broker, you can never do Intermediary With Appointments because the agent can not represent a side and the broker represent a side.

(2) The second type of Intermediary is Without Appointments. In this formation, an associate FACILITATES the transaction between the principals (the buyer and the seller) and can by no means provide any advice nor any opinions. What documentation you provide to one principal, you have to provide the other.

Regardless of which is choosen, the agreement has to be in writing AT THE START with Texas REALTORS form 1409 and everyone must sign the written agreement.

Many times when sellers have chosen an agent or broker to work with and they are moving through the marketing f the seller's property everything is fine.  Everything is fine until an unrepresented buyer appears that the agent or broker puts under a representation agreement and then that buyer wants to buy the seller's property.  With Intermediary without appointments where the agent or broker facilitates the transaction between the parties, sellers often times feel like they have lost their representation.  In fact, in this situation the seller actually has lost their representation because the agent or broker is no longer able to provide advice nor provide opinions to the seller about anything -- and the same thing happens with the buyer because the agent or broker is limited by law to not provide advice or opionions to either party.  If they do, they are breaking the law.

Also, in Intermediary, when the agent receives the inspection report from the buyer's inspection, it HAS to be sent to the seller (in Intermediary without appointments) or sent to the associate representing the seller (in Intermediary with appointments) to be delivered to the seller. The reason this has to occur is that the broker has been put on notice of the material defects with the home and must disclose the report to their client.

Yes, the seller principal will have to redisclose and update the seller's disclosure notices if the transaction falls out and another buyer has to be found. If you have a backup offer, the backup offer buyer and agent should immediately receive the redisclosure to include the known defects.

Agents and brokers need to be intentional with the words you use and the explanation they make. If anyone ever says “I’m representing both sides” you know they clearly do not know what they are doing and you need to run away from them and run fast!  Hiring a competent agent or broker means hiring someone that understands the law, the way real estate is handled, as well as can keep you out of legal trouble and deliver results.

Agents and brokers in Texas are real estate licensees and are all overseen by the Texas Real Estate Commission.  It is their duty and responsibility to know and understand the rules that govern their license and the way each of us may work with clients.  So, it's important to remember, it's not only what you say, but how you say it.

It is also important to note that agents and brokers in an intermediary situation are suppose to treat all parties to the transaction honestly, they are not allowed to disclose to a buyer that a seller will accept a price less than the asking price unless otherwise instructed in writing by the sellers or tell a seller that the buyer will pay a price greater than the price submitted in a written offer to the seller unless otherwise instructed in writing.  Additionally, the agent or broker may not disclose any confidential information or any information either party specifically instructs them not to tell unless otherwise instructed in writing.

If you have any questions, please reach out to me.  I am happy to discuss the ways real estate is handled and how we may not only provide you with the results you are looking for but also do it correctly.

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