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Could someone please explain the specific differences between a buyer's broker and a transaction broker? (This for a possible purchase in Sarasota, FL.)
Is a transaction broker really just a second seller's broker?
Thanks for your knowledge.
A Buyer's Broker works specifically for the Buyer in a real estate transaction.
I don't work as an agent in Florida, but my understanding is that the agents in that state work for the transaction and don't actually represent any one particular party involved in the transaction.
There are basically two types of agency relationships in Florida real estate. Single agency and transaction agency. A single agent (which has become very rare) has a high level of fiduciary responsibility imposed by law to either the seller or the buyer but not both in the same deal. The single agent has a responsibility to get the best price and terms for the principal. The flip side of that relationship is that the principal (the single agent's client) also has responsibility for the actions of the single agent. Single agency has a lot of liability for the broker, the broker's agent, and the principal, and the liability is the reason that transaction agency has become so much more prevalent. A transaction agent still represents the buyer or seller but in a limited way with no fiduciary responsibility. There are still legally imposed requirements on a transaction agent but nothing like the single agent arrangement. A transaction agent can represent both the buyer and the seller in the same deal because a transaction agent may not represent one side to the detriment of the other and that includes disclosing only information that is required by law.
Basically, from a practical point of view, both systems work just fine but with the transaction agency arrangement, everything gets done the way it should be done without everyone suing each other (hopefully). Brokers and agents are presumed to be transaction brokers/agents unless there's a specific arrangement for single agency.
In Florida, a Transaction Broker has limited confidentiality for both buyer and seller so be careful what you disclose. A Single Agent has full confidentiality and loyalty to the one client only (buyer or seller). I use Single Agency for all my clients unless a buyer either wants me to write the sales contract for one of my listings or another agent of my broker is involved in the same transaction.
As I like to explain to clients, when I work as a transaction licensee, I'm acting as a facilitator between the two parties. Gathering, explaining and getting documents signed, helping when needed with title and mortgage services and getting both sides to the settlement table. Not working in either party's interest. It's an option that's worked well with FSBO's because they often haven't a clue how to close after the papers are signed.
Thanks for all your replies above. My specific concern about transaction agents is captured - in a nice way - by the comment below:
Quote:
Originally Posted by Laurie Matthias
When I work as a transaction licensee, I'm acting as a facilitator between the two parties....getting both sides to the settlement table. Not working in either party's interest.
Put a little less nicely, a transaction agent's overriding objective is to get the buyer and seller to agree on terms, expecially price, whether that price be higher or lower than the fair market value. As a buyer, a transaction agent isn't really interested in helping me to get the lowest price on a property. By the same token, a transaction agent isn't really interested in helping a seller to get the highest price.
I understand that a buyer's agent will get paid a commission only when a sale occurs. But am i wrong in believing that a buyer's agent will act more in my interest than a transaction agent?
Put a little less nicely, a transaction agent's overriding objective is to get the buyer and seller to agree on terms, expecially price, whether that price be higher or lower than the fair market value.
Not exactly correct. The transaction agent provides you with all of the information on the market (comparables) so you can make an informed decision. If you are getting a loan, it really does no one any good for you to overpay because the deal will probably fall apart when the property doesn't appraise high enough for the loan amount. Besides, the market value that matters most to you is the price you are willing to pay for a particular property vs. the price at which the seller is willing to accept. That has nothing to do with the agents involved. What you need most is good, accurate information and a good, well organized facilitator who makes sure that everything that should be done and must be done gets done in the correct time frame. Most people don't realize it but most of the work really begins for the agent once the contract is signed.
Regarding the liability in a single agent relationship, unlike a transaction brokerage relationship, the buyer or seller can be held more directly responsible for the actions of a real estate agent who is working for you (single agency) as opposed to with you (transaction agency.) I'm not an attorney so take this with a grain of salt but this is the way I learned it when I studied for my license.
The transaction agent provides you with all of the information on the market (comparables) so you can make an informed decision. If you are getting a loan, it really does no one any good for you to overpay because the deal will probably fall apart when the property doesn't appraise high enough for the loan amount.....What you need most is good, accurate information and a good, well organized facilitator who makes sure that everything that should be done and must be done gets done in the correct time frame. Most people don't realize it but most of the work really begins for the agent once the contract is signed.
Thanks again for your reply. Not to beat this to death, but doesn't a buyer's broker do all of these things too?
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