Real Estate Intermediaries and Brokerage services

intermediary in a real estate transaction?

How does this impact your real estate transaction?

Brokers, in a real estate transaction, can act as dual agents or Intermediary (a term utilized by Texas Real Estate Commission). This information is specific to the State of Texas as each State has different laws.

The “Information About Brokerage Services” form, which must be initialed by seller, buyer, landlord or tenant prior to any substantive conversations with a client, sets out the meaning and responsibilities of Brokerage Services. 

The contract itself also defines what an intermediary in a real estate transaction. 

Several conditions must be met to act as intermediary inclusive of obtaining “written agreement of each party to the transaction” to act as intermediary;  the broker is required to treat both parties impartially and fairly; and broker may assign a different license holder to each party to provide opinion and advice to seller or buyer. Again, this is with your full understanding and consent from the client. 

What this means to you, the consumer? 

First, a definition – a Broker is responsible for all acts of sales agents that they sponsor.  Sales Agents (Realtors) are sponsored by a broker and work with the client on behalf of the broker. The Broker is the entity you actually have a contract with. The broker is ultimately responsible for the acts of an agent or Realtor.  

If both parties utilize the same agent (broker does not assign different agents to represent seller and buyer separately) in a transaction; then neither party can be privy to opinion or advice.  The agent provides only factual information to both parties and must remain impartial to both sides.  The value of representation by a brokerage firm may then be diminished substantially by taking this action. There are times when this makes sense especially for investors who have had experience with the process.  It may also make sense in the case where a reduction in fees can be realized having both sides represented by the same agent.

Notably, most brokerages advise against and will not allow their agents to work for both sides because every transaction is different and complexity changes as the file progresses.  The fact that neither side can depend on opinion and receive advice does present problems.  Often one or both sides of the transaction feel that the other side is getting an advantage.  

It is recommended that prior to accepting Intermediary Representation, that the consumer be aware of the pitfalls in doing so.