A real estate broker operating as an intermediary has a buyer client and a seller client for the same transaction. The buyer client asks the broker to negotiate a lower price. The seller client, unaware of the buyer's request, asks the broker if the buyer would accept a higher price. What is the broker's appropriate action regarding these confidential requests?
- AThe broker must refuse to negotiate price for either party and advise them to negotiate directly.
- BThe broker may not disclose either client's confidential information or advice to the other party, but may provide opinions or suggestions to both.
- CThe broker should only disclose the buyer's request to the seller if it benefits the seller, and vice versa.
- DThe broker must disclose both requests to the other party to ensure fairness.
Show answer & explanationAnswer & explanation
Correct answer: B. The broker may not disclose either client's confidential information or advice to the other party, but may provide opinions or suggestions to both.
In an intermediary relationship, a broker cannot disclose confidential information (like a client's willingness to pay more or accept less) to the other party unless authorized by the client or required by law. The broker's role is to facilitate the transaction impartially, not to negotiate for one side against the other. They can offer opinions or suggestions that do not reveal confidential information.
Why the other options are wrong
- A. The broker can still facilitate the transaction and offer impartial advice; refusing to negotiate at all is not the correct approach.
- C. This is a breach of fiduciary duty and unethical; the broker cannot selectively disclose information based on perceived benefit.
- D. This would be a breach of confidentiality for both clients in an intermediary relationship.
Intermediary Broker Confidentiality
In a Texas intermediary brokerage relationship, the broker is prohibited from disclosing confidential information or opinions to either party about the other, unless authorized by the client or required by law.
- Applies to confidential information (e.g., price flexibility)
- Requires written consent if disclosure is authorized
- Broker acts as a neutral facilitator
Memory trick: An intermediary's scale must stay balanced, secrets sealed, and advice neutral.