Just one example: the seller wants the highest possible selling price, the buyer wants the lowest possible selling price, and a dual agent – who supposedly advises and represents both sides – is right in the middle. Needless to say, dual agency creates huge conflicts of interest. It’s seen most often when a prospective buyer without a realtor calls an agent to inquire about a home they’re selling, and the agent winds up representing both sides. It’s when a single agent represents both the buyer and seller – meaning they keep the entire commission, not just half of it. There’s a huge difference.ĭual agency is an enormously controversial subject in real estate. Isn’t Transaction Brokerage the Same as Dual Agency?Ībsolutely not. A transaction broker collects a small fee from each side when the sale closes, instead of a commission. The broker doesn’t give advice, but simply handles details that the buyer and seller can’t or don’t want to do themselves. A transaction broker works for both sides and is a neutral facilitator. A realtor represents only one side in a transaction, and is legally required to work on their behalf to get the best deal for them. Read on.īottom Line: A transaction broker has the same knowledge and experience as a realtor, but the two perform very different functions. Otherwise, you could find out too late that you’re really using a dual agent. Be sure to understand the legal status of these brokers where you live, before you decide to hire one. Transaction brokers are most commonly found in Florida and Colorado, which were the first states to approve the practice. Their services are only legal in about 30 states. You may not have the option of using a transaction broker instead of a real estate agent. The fee can often total less than $1,000, which is obviously far less than the amount the seller would have to pay for each side’s realtor commissions in a traditional sale. When the deal closes the broker is paid a flat fee from the proceeds, with each side paying half. Their only goal is to broker a fair and successful home sale. In short, a transaction broker isn’t trying to get either side the best deal. In formal terms, they have no fiduciary responsibility to either party and can’t be held legally responsible if anything goes wrong. They don’t give advice to either the buyer or the seller they simply help with communication and paperwork, and ensure that the transaction is handled properly and legally. Similarly, a buyer’s agent only represents the homebuyer, and is responsible for helping them get the best possible deal.īy contrast, a transaction broker works with both sides and must stay neutral. The biggest difference between these brokers and realtors is that they work for the parties on both sides of the transaction.Ī listing agent works for the home seller, and is responsible for helping them get the best possible deal. And in most states where transaction brokers operate, they must hold real estate licenses. In fact, many of them have worked as traditional agents. They ideally have just as much knowledge and experience as a realtor. What Is a Transaction Broker?Įssentially, a transaction broker is a facilitator rather than a real estate agent. Here’s what you need to know about these alternatives to realtors. There are one or two very specific situations, though, in which the services of a transaction broker could make sense and save you a lot of money. But should you think about using a transaction broker rather than a traditional real estate agent? Home sellers might also have heard of people called “transaction brokers,” who charge a lot less than realtors do when a sale closes. That payout will probably be for less than the home would fetch on the open market – often, a lot less – and selling to cash buyers is an option best used by just certain types of sellers. And then there are homeowners who decide to sell their house to a cash buyer, paying no commissions and receiving a quick payout.They just have to make sure the agent they choose will provide all the services they need, despite the lower payday. For many home sellers, that can be a good decision. Others try to lower the amount of commission they have to pay by using a discount broker.Some sellers try to sell their own home through a FSBO, or “For Sale By Owner.” If you can find a buyer and close the transaction without using a realtor, that can save thousands of dollars (or even more). When you’re selling a house, the thought is always in the back of your mind: there must be a way to avoid paying big realtor commissions.
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