Reading every page of a sourcing agreement and still losing money on an affiliate resale

A useful case: a buyer client engages a sourcing service with an agreement better than most. Fee $9,000 at closing, buy box defined, tail limited to ninety days, and a sentence saying the company acts as the buyer's agent for acquisition. Three clauses get marked up, two get accepted, and the buyer signs. The service brings a 1970s fourplex, decent bones, contracted at $212,000. The buyer puts $5,000 earnest money down and it goes hard after a ten day inspection window, agreed to because the seller had two other offers. Inspection turns up $18,000 of deferred items already priced in. Then the title commitment shows a recorded memorandum of contract from an entity the buyer does not recognize. It turns out the service had contracted the property at $189,000 through an affiliate three weeks earlier, and the $212,000 sale price is their resale price. Total to them: $23,000 of spread plus the $9,000 fee. The agreement says the company will not receive compensation from any other party to the transaction. It says nothing about an affiliate acting as principal on the sell side, because an affiliate selling a house is not another party compensating the company, it is the company selling the house. That is the gap worth reading past carefully. Walking away here costs the $5,000 earnest money since it had gone hard, minus $1,600 recovered after a dispute over the inspection credit, plus $600 in legal for the exit letter. Six weeks and roughly $3,400 net. The fix for next time: one sentence in the agreement stating that the company and any affiliate will not take title to, hold an equitable interest in, or profit from the sale of any property presented, and will provide the fully executed seller side contract on request. And earnest money should never go hard before the title commitment is in hand, regardless of competing offers. Whether this kind of conduct is permissible in a given state is a question for a lawyer there.