Mastering the Maze: Can a Buyer’s Realtor Represent 2 Buyers on the Same Property?

In real estate, though it is common to have one agent representing two buyers for the same property, the specifics depend on the market and the laws of each state. In cities where the real estate market is particularly active, many buyers often vie for the same property.

As counterintuitive as this practice might appear, it’s quiet common in the field. What’s surprising is that it is more common than we think. And, neither the agent nor the buyers seem to find it suspicious. Both parties simply go along with it.

But, Can a Buyer’s agent represent multiple buyers on the same property?

If a realtor or an agent isn’t affiliated with the National Association of Realtors (NAR), there’s no overarching law (unless specific state laws intervene) that prevents the realtor or agent from representing multiple buyers.

In fact, some exclusive buyer agency agreements include specific clauses. Such clauses state that an agent may represent more than one buyer for a single property. These Buyer Rep Agreements address this facet of realty. Thus, making it clear that a realtor, agent, or brokerage firm can represent multiple buyers.

This practice is layered and complex. For brokerage firms or agents, there’s a moral and ethical imperative to act in the best interests of all buyer(s). The responsibility is significant, with buyer(s) heavily relying on the agent to secure the best deal. It isn’t just about numbers; it hinges on faith and trust. This is why all states maintain guidelines to ensure transparent, fair rules and laws are followed.

Yet, even with laws in place, the nature of such transactions can lead to complications. Conflicts of interest are inevitable. After all, when two parties are interested in the same property, only one can be the successful buyer. How can an agent impartially represent both buyers?

To streamline the process, real estate authorities have established clear rules and regulations. Agents and brokerage firms must be intimately familiar with these rules. Knowledge of what’s permissible and what’s prohibited in their operational state is crucial. Ignorance of these laws can lead to serious consequences for both their careers and the deals they facilitate.

1. How an agent manages 2 buyers!?

An agent handling two buyers for the same property seems straightforward. If you view the situation simply, the agent is just a mediator between the seller and the buyers.

They don’t set property prices or determine the terms and conditions of the property or the parties involved. The agent merely conveys relevant information. However, there are intricacies in this arrangement. Let’s delve into them:

Aspect 1: Ideal Rules vs. Real-Life Challenges

In many states, it’s legal for an agent to represent two different buyers for the same property. But it is not as simple as it seems. That’s why it might be best to avoid such situations when possible. At the heart of these deals is building relationships with clients, and this brings its own complexities.

Handling two buyers raises a question: Can an agent truly be impartial? Many argue it’s not feasible. Often, agents favor one party over another, influenced by the potential commission. This bias can lead to various losses for clients, from financial to emotional stress. While agents strive for ethics and neutrality, the human factor always plays a role.

The Realtor Code of Ethics emphasizes that agents must prioritize their clients’ interests. However, there’s a significant difference between a client and a customer relationship. Many buyers believe they’re merely customers, but the relationship is often more fiduciary.

When an agent deals with a customer, there’s usually no written agreement. But with a client, the agent must follow six fiduciary duties. This includes obeying the client’s wishes, maintaining loyalty, and ensuring confidentiality.

5 fiduciary duties that agents have to follow when working with a client

1. The agent, lawfully, has to obey the client’s instructions.
2. The agent has to be loyal to achieving the client’s goal.
3. The agent has to divulge all the details about the property and deal so that the deal could materialize in the best possible manner.
4. The agent has to maintain confidentiality.
5. The agent ought to be accountable and has to handhold the client throughout the process of finalizing the deal. This also includes providing the client care, protection, and diligence while representing them. 

For example, in Pennsylvania, agents must provide a “Consumer Notice” to potential buyers before deep discussions begin. This outlines the buyer’s expectations and agent’s responsibilities.

Interestingly, “dual agency” has different interpretations in different states. Some see it as one agent representing two buyers for one property. However, others view it as an agent representing both buyer and seller. This ambiguity creates ethical dilemmas, especially concerning confidentiality.

Many aren’t aware that it’s permissible for a listing agent to discuss offer details with unrelated agents. The catch is they cannot reveal the buyer’s personal details. Since “confidentiality” is subjective, agents need clear guidelines from their clients on what to keep private.

Aspect 2: Exclusive vs. Non-exclusive Contracts

In an exclusive contract, a buyer works only with one agent. But with a non-exclusive contract, a buyer might work with several agents. Some buyers avoid formal agreements, losing the assurance of documented disclosures from the agent.

Both exclusive and non-exclusive contracts affirm the agent’s commitment to the buyer’s interest. They also allow agents to show the same property to different buyers. Only when a broker favors one buyer’s interest over another’s does a conflict arise. But this concept can be contradictory.

Another point of contention is the term “confidential.” Unless there’s a separate confidentiality agreement, its interpretation is ambiguous. Notably, “exclusive” means a buyer works with one agent, but the agent can represent multiple buyers for the same property.

In a perfect world, everyone would have an attorney. However, many can’t afford one.

Lastly, the Realtor Code of Ethics mentions treating clients and customers justly. But who defines fairness when two buyers want the same property? When one buyer finally seals the deal, how is fairness ensured for the other?

Also read:

• Do relators work on Weekend?
• Can realtors be property managers?

2. Do multiple representations harm a Buyer?

Whether or not multiple representations harm a buyer is dependent on numerous factors. For instance, it does not harm the buyer if: 

• The buyer’s best interests are represented in the most viable manner.
• Irrespective of the number of buyers interested in buying the property, the buyer is treated fairly.
• All the details about the property and the deal thereafter are explained in complete detail.
• The disclosures in the paperwork are well explained so there is complete transparency.

If the brokerage firm or agent has a client representation agreement in place, the buyer is safe to go ahead with this kind of arrangement. If all these things are not in place, there may be times when, for a buyer, multiple representations can get tricky. It is therefore mandatory to have a written document in place that clearly mentions all the information that’s relevant to this deal.

3. What to consider when your agent represents both sides?

When an agent or a brokerage firm represents two or more clients who are keen on buying the same property, it is imperative to inform the relevant parties. Once the buyers are aware of the situation, it is up to them to decide whether or not they still want to go ahead with the same agent or brokerage firm.

In this case, it is also important to get written consent from the competing buyers. In this manner, the agent or firm will have safeguarded themselves from any probable issues that may crop up in the future. 

Taking independent legal advice on how to draft a written agreement for both potential buyers is a good action to take. Once all the clauses are mentioned in writing, there will be little (or no) room for ambiguity.

4. What is the conflict of interest and how it creates problems for both?

A conflict of interest is when the same brokerage firm or a designated agent represents two or more clients who are keen to buy the same property. It is obvious that though both buyers want to buy the same property, they cannot do so.

In such a complex scenario, how does the brokerage firm or agent decide which client should get the privilege of buying that property?

Whether the agent or brokerage firm represents two or more buyers who are interested in the same property, it is key to note that they have to keep the buyers’ interests in mind and treat those demands as their topmost priority. In such a scenario, showing the same property to different clients isn’t a breach of duty, what is, is that the agent cannot keep one buyer’s interest before another’s.

How does the agent keep this in mind when all the information is available to the agent?

The agent’s job is to present the best offer possible, keeping the client’s best interests in mind. This isn’t possible because both cannot buy the same property. Therefore, it is safe to say that the brokerage firm or agent cannot keep the buyers’ best interest in mind. It’s contradictory. 

One of the key reasons why this situation can create multiple issues is that the agent is aware of confidential information given by the respective clients. Though it is key to note here that nowhere has it been mentioned what is to be considered ‘confidential’ unless of course there is a separate confidential agreement in place, it is understandable that the most confidential information is the maximum price both the clients are willing to pay to buy the property. In this case, when the prices are known to the agent, it is obvious that the buyer offering the price that’ll help the deal finalize will be given more importance and preference.  

5. What Should Relators do if they have a conflict of interest?

The agent or brokerage firm has to inform their clients of this conflict of interest. The reason for it, and their available options. Once the agent has disclosed a conflict of interest to the clients, it is up to them to decide how they want to proceed.

The agent or firm must provide the buyers an opportunity to obtain impartial legal counsel before they determine what they choose to do next. Also, in case both buyers are okay with the same brokerage firm or agent representing them, note that there will be a change in the representation of the clients. In case there is any impending conflict of interest, the brokerage or agent should notify the buyers in a timely manner so they can decide what they would like to do next. 

It is important to note that the brokerage firm or agent cannot share any information with either buyer that may enable them to bag the deal because that will be an unethical practice to follow. Knowing a buyer’s confidential information can influence the other buyer to alter his offer to suit his needs (as both want to buy the same property). This manipulation will mean that one client is being preferred over another, which is not correct. This is one of the prime reasons why it is sometimes in the best interest of both buyers not to go ahead with a brokerage firm or agent representing them.  

Navigating the intricacies of real estate, especially when an agent represents multiple buyers for the same property, can be confusing.

While the law might offer guidance, the human element invariably introduces gray areas that challenge established norms.
Buyers and agents alike should be well-informed, not only about the legal landscape but also about the subtleties and nuances of their relationships. At the heart of every real estate transaction lies trust, and ensuring that it remains unbroken is paramount for both parties involved.