One Agent – Two Buyers – One Home | Pocono Mountains Association of REALTORS®

By James L. Goldsmith, Esquire

Conflicts of interest are unavoidable in this business, or practically so. I suppose you could represent only one buyer or one seller at any given time, but then most of you like to eat! This article explores the conflict of representing multiple buyers who all may be equally suitable and interested in a single home.

There is more than one buyer for most homes, so what happens when you have two, both of whom may be perfectly matched for a property that you come across as a new listing? Do you decide who is the more suitable of the buyers for that particular home? Do you consider whether either would be financially stretched and therefore better off waiting for a more reasonably priced property? Do you think about the commute each buyer would have or whether one buyer is less suited for the yard work that the property presents? What may you consider and what should you do?

Playing matchmaker or picking favorites may be hard to resist, but it should be avoided. We owe fiduciary duties to our clients and while our subjective evaluations may be spot-on, we don’t own that decision. The multiple buyer/single-property situation is a conflict of interest, regardless of how easily and effortlessly the situation may play out. Because it represents a conflict of interest, we are required by Pennsylvania’s licensing law to notify our clients of its existence.

When we discovery a single property that may be perfect for two of our buyers, we first should notify them that it exists, because we have a fiduciary responsibility to put our best foot forward to satisfy their real estate needs. We must next advise our buyers of the conflict by telling them that we also represent one or more other buyers to whom we owe a fiduciary duty and who may share an interest in the same property.

All conflicts must be disclosed as soon as they arise. That means if we already have multiple buyers who are similarly situated, and a property becomes available, we should disclose the conflict of interest at the same time we disclose the property’s availability. If we already represent one buyer who is looking at an available property, and we take on the representation of another, that would be the time to disclose the conflict, should it exist.

I am certainly not suggesting that we notify all buyers of all properties, but I am focusing on the need to disclose the conflict of interest should more than one of our clients likely have an interest in the same property.

One thing that makes disclosure of conflicts of interest easier is your talking about the possibility of conflicts when you first list a buyer. Buyers can understand that you may represent multiple buyers and that several may be in the same financial boat looking for the same type of property in the same geographical region. Don’t be afraid to make this disclosure, because – if for no other reason – it demonstrates that you are a seasoned sales agent and that you have a following! Then, should a conflict arise, you should have no difficulty reminding your buyer that at the time you signed them up you told them that such a conflict could arise. Of course, you also will want to advise your clients that you are not favoring any buyer and that you are providing them with all of the same information at the same time so that anyone with a serious inclination should move quickly to see and decide.

While the Real Estate Licensing and Registration Act does not state that the conflict must be disclosed in writing, it is always good to do so. A simple email to the effect that a property has become available and that several of your buyers may be interested is easy enough to compose and send.

Conflicts of this nature can be resolved in different ways. Some offices seek to have the salesperson jettison one of the buyers to another agent so that each buyer has individual representation when it comes to assessing that particular property. Always determine whether your broker has such a policy and keep in mind that the duty to disclose conflicts exists whether your company has a specific policy or not.

Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.