When your real estate broker has a conflict of interest

November 23, 2025

By Nadia Cabrera-Mazzeo, Esq.

Conflicts of interest arise when a real estate broker’s interests (or the interests of someone closely related to the broker) don’t line up with the interests of the buyer or seller who hires the broker. This blog post will cover several examples of conflicts of interest that buyers and sellers should look out for. The safest way to deal with a conflict of interest is to not hire that broker, but in any case, clients should insist that the broker agree to be their agent with a legal duty to act in the client’s best interests.

Real estate brokers are required to disclose conflicts of interest

As part of their professional duties, the law requires brokers to disclose any potential conflicts of interest related to the transaction, including:
     Any written brokerage relationship the broker has with any other parties to the transaction,
     Any material interest or relationship of a business, personal, or family nature that the broker has in the transaction, or;
     Any written agreement the broker has with a transaction coordinator who will be providing brokerage services related to the transaction.

Disclosing a conflict of interest does not make the conflict magically disappear. The purpose of disclosure is to allow the client to make an informed decision about whether to move forward in spite of the conflict or to find a professional who doesn’t have a conflict with the transaction.

You do not have to sign a conflict waiver or agree to move forward after learning about the conflict

Conflicts of interest fall on a spectrum, with some being more serious than others. In any case, any conflict of interest is a red flag and you should step back and consider whether it’s in your best interest to move forward with that broker or whether you’d be better served by a broker who does not have a conflict of interest in your transaction. It’s not personal. The existence of a conflict of interest does not make someone a bad person or a bad broker, but frankly, it does make them that much less likely to put your best interests above all else.

Too often, people move forward after a conflict is disclosed and then continue working with thesame broker even after the conflict proved to be an issue that eroded trust. My friend who is also a lawyer recently bought a house. Like the great majority of real estate consumers, my friend hired the first broker she met. The first house they looked at was owned by the broker’s family member and the conflict of interest was appropriately disclosed. In this case, the conflict appeared to give my friend an advantage because the house wasn’t on the market yet. My friend asked her broker to communicate an offer to the seller, but the broker talked her out of it because he broker thought the offer was too low. Usually, when a broker advises their client that an offer is too low, it’s because the low offer might jeopardize the client’s chance of securing the property. With this property being off the market, a low initial offer likely would not have jeopardized my friend’s chances, but she decided against making the offer. The broker’s conflict of interest likely interfered with the broker’s judgment of my friend’s offer. My friend ended up buying a different house and proceeded to have a frustrated relationship with the broker through that process.

Examples of what conflicts might look like:

     The seller is a family member of the buyer’s broker or the buyer is a family member of the seller’s broker;
     The bank’s loan officer is a family member of the buyer’s broker;
     The seller’s broker is part owner of a construction company and the broker recommends that construction company to do renovations on the house;
     The seller’s broker gets a commission for recommending a certain company;
     A broker’s family member works at a title company, insurance company, etc. and the broker recommends that company for the transaction;
     The same broker represents the buyer and seller.

Disclosing a conflict of interest does not make the conflict magically disappear. The purpose of disclosure is to allow the client to make an informed decision about whether to move forward in spite of the conflict or to find a professional who doesn’t have a conflict with the transaction.

There is an inherent conflict of interest between buyers and their brokers

When a seller hires a broker to help sell their house, their interests are aligned—they both get money when the house sells. But the relationship looks quite different for buyers when the buyer’s broker also gets paid when the house sells. Indeed, the way that buyer broker commissions traditionally work is that it’s actually the seller broker’s commission and the seller broker splits the commission with the buyer broker. So the buyer broker’s financial interests are aligned with the seller—that’s a conflict of interest. The only way to fully fix this inherent conflict of interest for buyer brokers is for the buyer to pay the broker a direct fee that is not a commission contingent on the sale. Since that’s not traditionally how real estate works, the next best thing is for the buyer broker to have a legal duty to act in the buyer’s best interest and to put the buyer’s interest above their own. That’s called agency and that’s why we normally call real estate brokers “agents.” The only problem is that in New Mexico and several other states, almost all brokers enter into non-agency relationships with their clients.

Law office of Nadia Cabrera-Mazzeo, Esq.

Small business and contracts lawyer

Based in Taos, serving clients throughout New Mexico

505 427 2025

nadia@honestcontracts.com

The information on this website is not legal advice and does not create an attorney-client relationship. The rates and fees listed on this website may not be the most up to date.