Most people who are looking to buy or sell a home understand what a buyer’s or seller’s agent is. Although you may not fully comprehend what each does for their respective parties, transaction brokers have recently emerged as one of many alternatives to buyers’ and sellers’ agents for real estate services in many states. Many people are perplexed as to what a transaction broker is. So, let us discuss the transaction broker vs. single agent relationship in Florida, and when using one can benefit your personal real estate transaction.
What is a Transaction Broker?
A transaction broker is a licensed real estate agent who acts as a third-party intermediary in a transaction. He or she provides services to help a deal close but does not act on behalf of any specific client. The transaction broker’s primary responsibility is to assist with tasks that a buyer or seller may find difficult to complete on their own. However, he or she is not permitted to give either client any advice on the sale or otherwise influence the transaction. Some common tasks performed by transaction agents include:
- Choosing an appropriate listing price for a property
- Creating proposal letters and sales contracts
- Managing the buyer and seller’s communications
- Helping with the closing
Remember that a transaction broker is not the same as a dual agent. A dual agent works for both the buyer and the seller. This means he or she assumes the role of a transaction broker and will negotiate favorable terms on behalf of both clients. Having said that, dual agency is illegal in some states, such as Florida, and transaction brokers have essentially replaced dual agents.
Are Transaction Brokers Legal?
People may be perplexed at first when learning about transaction brokers. They may wonder:
How legal is it for a transaction broker to assist both the buyer and seller of a home? Isn’t that the same as having two agencies?
No, it isn’t. This is due to one significant distinction between a dual agent and a transaction broker. In a real estate transaction, a dual agent represents both the buyer and the seller. As a result, the real estate community generally accepts that, despite their best efforts, they cannot truly keep both parties best interests in mind at the same time.
The main distinction is that a transaction broker represents neither party. This means that when an agent acts as a transaction broker, they have no financial stake in the transaction. As a result, they can provide both parties with impartial advice and assistance.
Transaction Broker Relationship
Residential real estate licensees in Florida may act as single agents, transaction broker, or maintain a no-representation status in a luxury real estate transaction. Unless a single agent or no brokerage status is specified in writing to the customer, it is assumed that all licensees are acting as transaction brokers.
A transaction broker relationship represents a buyer, seller, or both parties in a real estate transaction but does not act in a fiduciary capacity or as a single agent. Limited representation allows a licensee to facilitate a real estate transaction by assisting both the buyer and the seller; however, when acting as transaction brokers for both parties, a licensee will not work to represent one party at the expense of the other.
A buyer or seller in a transaction broker relationship is not liable for the actions of a licensee.
The licensee’s responsibilities include the following:
- Dealing with integrity and fairness
- Keeping track of all funds
- Executing the transaction with skill, care, and diligence
- Disclosing all known facts that have a material impact on the value of the residential property and are not readily visible to the buyer.
- Presenting all offers and counteroffers on time, unless a party has previously directed the licensee in writing otherwise;
- Unless waived in writing by a party, limited confidentiality will prevent disclosure that the seller will accept a price less than the asking or list price; that the buyer will pay a price greater than the price submitted in a written offer; of any party’s motivation for selling or buying property; that a seller or buyer will agree to finance terms other than those offered; or of any other information requested to remain confidential by a party.
- Any additional responsibilities agreed upon with a party.
In all residential sales, a transaction broker in Florida must disclose the nature of their relationship with a buyer or seller, but not in commercial real estate transactions. Unless one of the other two available brokerage relationships is established in writing, licensees are presumed to act as transaction brokers.
Transaction Broker Vs Single Agent
Here are some of the key distinctions between a transaction broker relationship vs a single agent relationship in Florida.
#1. A transaction broker does not represent a client in negotiations.
One advantage of hiring a real estate agent is that they can negotiate on your behalf to get a better deal. As a neutral party, a transaction broker will not attempt to influence the sale price in any way other than to suggest a competitive market value for the property. Clients who use a transaction broker must therefore negotiate on their own if they want a better deal.
#2. There is no implicit confidentiality. There is no implied confidentiality.
Due to the fact that the transaction broker does not represent either client, any information shared with the agent may become public. Assume the buyer informs the transaction broker that he has made an offer but is willing to go higher. Because he or she does not represent either client, the transaction broker is not required to keep that from the seller. It is entirely up to the broker whether or not to share this information. However, because the transaction broker is a neutral party, fiduciary duties are limited.
Transaction Brokers Often charge a Flat Fee in Florida
Rather than charging a commission, many transaction brokers charge a flat fee to facilitate a transaction. This is due to the agent’s role as a middleman rather than a broker in the true sense of the term. It all depends on the brokerage firm you select. However, in most cases, both parties will be charged a flat fee or a small commission.
What is the Distinction Between a Transaction Broker vs a single Buyer Agent?
The transaction broker is as skilled on the buy side as a buyer’s agent, but it is not their legal obligation to only represent the buyer. Again, transaction brokers are legally neutral and thus only assist in the transaction’s facilitation rather than solely representing the buyer. The transaction broker acts as a neutral party in assisting the buyer in preparing an offer on the house. This does not include advice on what to bargain for in a multiple-offer situation. They only serve to facilitate the buyer’s offer.
When is a Transaction Broker Helpful in Florida?
A transaction broker is an excellent choice when neither client requires the assistance of a brokerage to handle the transaction, but they do require the knowledge to help facilitate the deal. For example, if you want to buy a family member’s house and have agreed on a price, but need help making sure you have the proper contracts in place. Finally, transaction brokers exist to ensure that a sale is conducted fairly.
If neither party has an agent and you both agree to hire a transaction broker, this could be a significant way for you both to save money and time. However, this is only true if the transaction broker is equally skilled on both the selling and buying sides of the transaction. If they have only dealt with one side of the transaction, the other party may be at a disadvantage. If the agent works directly with the specific party and is knowledgeable in that field, the agent can advise that party on a more advantageous approach to the transaction.
Should I Use a Transaction Broker or a Real Estate Agent in Florida?
The good news is those transaction brokers are subject to the same rules as real estate agents. They must follow legal and ethical guidelines and promise to act impartially and fairly.
They can maintain their neutrality because transaction brokers are more concerned with the details than with the actual transaction. Furthermore, they do not assist you in negotiating. They are unconcerned about who pays the closing costs as long as the contract for the person who will pay is correct.
As a result, it is often preferable to hire a full-service real estate agent rather than attempt to work with a transaction broker. This is due to the fact that the buyer or selling agent will be someone who is truly on your side throughout the property transfer process.
The only real reason why someone might decide to use transaction brokers is to save money. This is because transaction brokers only charge a flat fee rather than a percentage of the home’s sale price. This portion is most likely known by its more common name: commission.
Conclusion
There are numerous people who can assist you in successfully buying or selling a home. While most people turn to Realtors for help, you can also work with a transaction broker. Although less common than standard agents, these can be a less expensive option in certain situations.
Frequently Asked Questions
What is a transaction broker example?
A transaction broker is a real estate brokerage firm that assists a buyer, seller, or both parties in a real estate transaction. Furthermore, a transaction broker can be a single agent of one of the parties in a transaction who provides customer service to the other party.
What is the definition of a transaction broker in Florida?
A transaction broker provides limited representation to a buyer, seller, or both parties in a real estate transaction, but not in a fiduciary capacity or as a single agent.
Which of the following duties is owed by a transaction broker?
Transaction brokers have a limited duty of confidentiality—they may represent both the buyer and seller in a single transaction, but they must not jeopardize either party’s bargaining power.
What is the difference between a transaction broker and an agent?
The agent negotiates on your behalf and works to get you the best possible deal. It is your agent’s responsibility to disclose any negative information about the property to potential buyers. A transaction broker, on the other hand, works with you, the seller, and the buyer throughout the transaction.
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