Pretty much everybody looking to buy or sell a house knows roughly what a buyer’s agent or seller’s agent is although they might not understand entirely what each does for their respective parties. However, recently in many states, transaction brokers have started to pop up as one of many alternatives to buyer’s agents and seller’s agents for real estate services. And many people are confused about what a transaction broker is. So, let’s talk about what a transaction broker does, and when using one can benefit your personal real estate transaction.
What is a transaction broker?
The basic definition of a transaction broker is a third-party that offers real estate services to buyers and sellers. This differs from a traditional real estate agent because the transaction broker is legally neutral. They can assist both the buyer and the seller in a transaction, acting as a mediator between both parties to the deal.
The role and purpose of a transaction broker can vary from state to state, and not all states allow transaction brokers. And if the buyer wants the agent to work intentionally on their behalf as a buyer’s agent, then they must sign an agency agreement with their real estate agent.
A transaction broker is also not considered a dual agent. Dual agency involves an agent or broker that represents both parties simultaneously. A transaction broker does not represent either party.
A transaction broker is bound by the same legal and ethical standards as a real estate agent representing individual buyers and sellers. But rather than individual representation, the transaction broker is an assistant to the transaction for both parties equally. And the transaction broker coordinates details rather than negotiating between the buyer and seller. They are facilitators.
What does a transaction broker do?
- Helps the buyer prepare an offer on a house, similar to what a buyer’s agent does in this scenario.
- Helps the seller determine a competitive list price, similar to what a seller’s agent does in this scenario.
- Facilitates buyer-seller communication, since the transaction broker is a neutral agent.
- Writes the contract to buy and sell for both parties.
- Coordinates the transaction from accepted offer to closing with both the buyer and the seller.
- Assists with closing with both the buyer and the seller.
What is a transaction broker relationship?
As a neutral party, the transaction broker is not looking to press any advantages that a buyer or a seller may seek, only to facilitate the transaction. Put another way, if you’re a buyer, and your seller has their own agent, then getting only a transaction broker to assist your transaction might possibly prove detrimental to you, because the transaction broker is not looking after your best interests specifically, they are looking to help the transaction. On the other side, if you’re a seller, and you have no agent, but the buyer does, again, it’s the same situation if you both decided to hire a transaction broker.
That said, if neither party has an agent, and you both agree to hire a transaction broker, this can potentially be a significant way to save money and time for both parties. But this is only if the transaction broker is equally skilled at both the selling side and the buying side. If on the other hand, the transaction broker is only skilled at one side or the other, as may sometimes be the case, then the other party could stand to be potentially disadvantaged or at least not promoted to the best of an agent’s ability. If that agent was working directly with the particular party and was skilled in that area, then that agent could definitely assist that party with a more advantageous approach to the transaction.
What is the difference between a transaction broker and a buyer’s agent?
The transaction broker may be as equally skilled from the buy side as would a buyer’s agent, however, it is not the legal duty of the transaction broker to represent only the buyer. Again, transaction brokers are legally neutral and are therefore only helping to facilitate the transaction, not represent the buyer. They would help the buyer prepare an offer on the house, but as a neutral party, they’re not going to give you advice on what to bargain for with an inspection or potentially with a multiple-offer scenario. They would be merely facilitating the buyer’s offer.
Do transaction brokers get commission?
A transaction broker is typically paid a flat fee out of closing from both parties rather than a percentage of the home sale as commission. That typically means that they are cheaper than an agent that charges commission, often significantly. Again, this may prove to be advantageous, if neither the buyer nor the seller have an agent and agree to work with a transaction broker.
Should you use a transaction broker?
If the circumstances are right, and it makes sense for both the buyer and the seller to use a transaction broker, then by all means, forge ahead. If time is of the essence, if saving money is the buyer’s and seller’s aim, then it might make sense.
But you could also consider using Trelora Real Estate to help you with your transaction. If you sell with Trelora, they will charge you a flat fee too. And if you buy with Trelora, they will split their buyer’s agent commission with you 50/50. But they will not be a neutral party, supporting both sides of the equation equally, they will be supporting and advocating for you. So, if you use Trelora, not only will you still save significant amounts of money, but you will also have the advocacy from either the sell or the buy side of some of the most experienced agents in the country that will go to bat for you to get the best possible deal.