Texas is one of the few states that allows the same broker to represent both buyer and seller. This is a terrible idea especially if that relationship eliminates the fiduciary relationship. Last time, I noted that an attorney for the insurance companies that insure real estate brokers thinks that an intermediary relationship eliminates the fiduciary relationship. The fiduciary relationship is a duty that requires the broker and agent to act in the best financial interest of their client, whether it is the seller or the buyer.
If my friend is correct, then here is what happens:
A seller employs a real estate firm to list and sell their house. At that moment, the broker and agent has a fiduciary duty to act in the best financial interest of the seller which is normally to get the best price for the house.
Along comes a buyer who does not have an agent of their own and they want to buy the house. They contact the listing agent and want to put a contract on the house. The listing agent asks if they have an agent and when they say they do not, the agent then offers them the intermediary relationship. There is a special form that has to be signed and the seller has to agree to it also. Once that document is signed, according to my lawyer friend defending real estate companies, the broker and the listing agent no longer have a fiduciary relationship with the seller. By his reasoning, they would not have a fiduciary duty to the buyer either.
What an absurdity! One minute, the realtor has a fiduciary duty and as soon as they get both buyer and seller to agree and sign a form, they no longer have a fiduciary duty AND they get to keep the entire commission from the sale! Only in Texas! Yee-haw!!!!
It is my contention that the broker actually has a fiduciary duty to BOTH seller and buyer and that the intermediary agreement does not change or alter that. It is interesting to note a couple of things. One, this arrangement is not allowed in more consumer friendly states like California, Washington, etc. Two, it is referred to as a Dual Agency in other states which is a much more accurate term.
Weirdly enough, Dual Agencies are illegal in Texas and require the return of the commission where they occur. Next time, more about dual agencies and what to look out for.