book 1, reading 2, page 87: Example 4 (Fair Dealing and Transaction Allocation):
The second part of the Comment states:
“Among other things, Preston must disclose to the client that the adviser may act as broker for, receive commissions from, and have a potential conflict of interest regarding both parties in agency cross-transactions. After the disclosure, she should obtain from the client consent authorizing such transactions in advance.”
I am not clear what the textbook is trying to explain here.
Could anyone enlighten me?
Thanks
It’s saying that the broker might represent both parties in a transaction. Therefore, the broker might not be working in your best interest.
Interestingly, I get many advertising flyers from real estate agents in my neighborhood in which they proclaim, apparently proudly, that they represented both the buyer and the seller in a recent transaction. I wonder why they’re proud of their obvious conflict of interest.
(I also wonder why real estate agents who represent buyers get a commission that is a percentage of the transaction price. That’s another obvious conflict of interest; if they act in their client’s best interest they should be negotiating for a lower price, not a higher one.)