Texas abolished traditional dual agency in favor of the intermediary framework. Where traditional dual agency allows one agent to actively represent both parties simultaneously (a conflict-prone arrangement), the intermediary is specifically designed to be neutral — the broker facilitates the transaction rather than advocating for either side.
The intermediary relationship may only be created by written consent from both the buyer and the seller. Consent is typically embedded in the listing agreement (for the seller) and the buyer representation agreement (for the buyer). A broker cannot become an intermediary by conduct or accident — written consent from both parties is a mandatory prerequisite.
What the intermediary CANNOT do:
What the intermediary CAN do:
When an intermediary broker has multiple sales agents in the office, the broker may appoint different agents to represent each party. These are called "appointed associates." Unlike the neutral intermediary broker, appointed associates ARE permitted to advise their respective clients on price, motivation, and negotiating strategy — they function as advocates.
Critical exam point: The broker remains neutral; the appointed associates can advocate. If the broker personally handles both sides without appointing associates (or if there is only one agent and that agent is working with both parties), no appointment is possible and full intermediary neutrality restrictions apply.
Real-world example: Big Realty LLC has three agents. Agent A listed a home for Seller Sam. Buyer Beth, who already has a buyer representation agreement with Agent B from the same firm, wants to buy the property. Big Realty LLC becomes the intermediary. The broker appoints Agent A as Seller Sam's representative and Agent B as Buyer Beth's representative. Each agent can now advocate for their respective client on price and negotiating strategy. The broker remains neutral at the firm level.
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Quiz Questions:
Q1. A broker represents both a seller (through a listing agreement) and a buyer (through a buyer representation agreement). The buyer wants to make an offer on the listed property. What must the broker do before proceeding?
A) Terminate the listing agreement to avoid a conflict of interest B) Refer the buyer to another broker so the listing can proceed without intermediary complications C) Obtain written consent from both the buyer and the seller to act as an intermediary D) Proceed without disclosure because written agreements already exist with both parties
Answer: C — The intermediary relationship requires written consent from both parties. The existing listing agreement and buyer representation agreement may contain intermediary consent provisions, but the broker must verify that both parties have consented in writing before proceeding. If not, written consent must be obtained.
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Q2. In a Texas intermediary relationship where the broker has appointed separate associates to represent each party, what is the appointed buyer's associate permitted to do that the undesignated intermediary broker cannot?
A) Sign contracts on behalf of the buyer without the buyer's separate authorization B) Advise the buyer on price and negotiating strategy based on the buyer's financial goals C) Share the seller's confidential information with the buyer to help them make a competitive offer D) Represent the buyer independently outside the firm's listing without the broker's knowledge
Answer: B — Appointed associates can advocate for their respective clients on price, motivation, and negotiating strategy. The broker — as the intermediary — remains neutral and cannot do this for either side. This is the key distinction between being an appointed associate versus being the undesignated intermediary broker.
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Q3. A broker is acting as an intermediary in a transaction but has only one sales agent in the office, who is already working with the buyer. The broker wants to appoint the agent to represent just the buyer and personally represent the seller. Which statement is correct?
A) This is permitted; the broker can personally represent the seller while the agent represents the buyer B) This arrangement is not possible; appointments require distinct agents for each party, and the broker serving as both intermediary and seller's appointed representative is not an "appointment" in the TREC sense C) The broker must obtain a special dual-appointment license from TREC D) This arrangement is fully valid as long as both parties give written consent
Answer: B — The appointed associate system requires distinct sales agents for each side. A broker cannot simultaneously be the neutral intermediary and also serve as one party's appointed advocate. If only one agent is in the office and that agent is already committed to one side, full intermediary restrictions apply to everyone — no appointment is possible.
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Q4. A buyer calls a listing agent directly (without a buyer's agent) to ask about a property. During the conversation, the buyer asks the listing agent to help them draft an offer. What is the correct characterization of this situation and what must the agent do?
A) The agent automatically becomes the buyer's agent by agreeing to help B) The agent should help the buyer draft the offer because it benefits both parties and speeds up the transaction C) The agent must inform the buyer that they represent the seller, cannot act as the buyer's agent without an intermediary arrangement, and should refer the buyer to an independent agent or obtain proper intermediary consent D) The agent may help draft the offer but must give the buyer a written disclaimer that they are not the buyer's agent
Answer: C — A broker cannot be both a seller's agent and a buyer's agent in the same transaction without properly invoking the intermediary process with written consent. The listing agent must clearly disclose their seller representation, explain the implications, and either refer the buyer to another agent or, if the broker is willing, initiate the proper intermediary consent process.
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Q5. Which of the following is NOT a restriction on an intermediary broker acting without appointed associates?
A) Cannot advise the seller on what price to accept B) Cannot share the buyer's confidential motivation with the seller C) Cannot facilitate the presentation of offers and counteroffers D) Cannot advise the buyer on negotiating strategy
Answer: C — Presenting offers and counteroffers is something an intermediary CAN do — it is the core of the neutral facilitator role. The three restrictions (A, B, and D) all involve advocacy, advice, or confidential information sharing that would benefit one party at the expense of the other.