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  • Writer's pictureTerry Krejci

What is Intermediary Agency in Texas?

Quoting from Dick Hargis,

the former legal counsel to the Houston Association of Realtors:

”Essentially, intermediary was created to provide brokers with an avenue to bypass the numerous pitfalls of dual agency.”

Why? Because real estate brokers make more money representing both sides of a real estate transaction. Whether you call it “dual agency”, which is illegal in Texas, or you call it “intermediary agency", it benefits the brokerage, not buyers and sellers.

How does intermediary agency work? Real estate agents ask a prospective client (buyer or seller) to sign an Intermediary Relationship Notice (Texas Association of Realtors form TXR-1409) at the BEGINNING of their relationship before any conflict of interest might occur. Signing that form as a buyer means you will be subject to intermediary agency if you consider purchasing any property that is listed by that same brokerage. The fiduciary responsibilities of the agent “representing” you will then be reduced as follows:

1. Your agent must treat your “fairly" rather than putting your interest above their own.

2. Your agent will no longer be able to advise you if the seller will accept a price less than the listed asking price (if they have some reason to know that).

3. Your agent no longer must inform you …”of any material information about the property or transaction known by the agent, including information disclosed to the agent by the seller.”

EXCLUSIVE buyer agency allows an agent to obtain whatever information that can be legally obtained on your behalf which might benefit you in a transaction because in essence your agent is putting themselves in YOUR shoes.

Let me give you two word pictures to describe intermediary agency. First, assume that you are going into a hospital for surgery. The hospital asks you to sign a waiver so that if they botch the surgery that you will not sue them. Good idea for them but not good for you. Why sign that? Why give away your rights in advance to something that might happen. When a seller lists their property typically they are asked to allow intermediary agency as part of the listing. When a buyer signs a representation agreement they are typically asked to authorize intermediary agency. The hospital illustration is a picture of what you are doing. Seller or Buyer, IF a conflict arises later THEN decide whether to agree to intermediary agency, not prior to there being any conflict of interest. Better yet, start out with EXCLUSIVE buyer agency. This word picture is from the perspective of the buyer/seller.

The second word picture is from the perspective of buyers. Intermediary agency is a balancing act by a real estate brokerage of the best interests of both sellers and buyers in a real estate transaction. It is a balancing act. To illustrate the balance, Charles Blondin balanced and walked on a tight rope 1300 feet across Niagara Falls in 1859. Not only did he do it once but he did it pushing wheel barrow across the Falls on a tight rope with a person sitting inside the wheel barrow. He also did it carrying his manager on his back. Now in THEORY, any real estate brokerage can balance the best interests of both the buyers and sellers in a real estate transaction. Also in theory any person could walk a tight rope across Niagara Falls. The question to you as a buyer is “How would you feel being in the wheel barrow?”

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