Single Agent, Transaction Broker, and Professional Courtesy Explained.

By
Real Estate Agent with RE/MAX Sun & Sea

In Florida the two most used types of relationships are Transaction Broker and Single Agency.

When you operate as a transaction broker, you have to do what is right to make the deal work without hurting any party. There is no fiduciary relationship and you cannot say things like I work for the best interest of the seller or the buyer. If you say something like that you are implying a fiduciary duty of Single Agency, not Transaction Broker. When you have disclosed that you are acting as a Transaction Broker and you say that you will disclose price and terms of other offers to get the best price for your seller; then here again you should be acting as and disclosing that you are a Single Agent. A typical blunder that happens very often is going to the seller and relaying to them that the buyer's agent said that their buyer can go higher. Remember, as a transaction broker you cannot use something against the other party. You must remain neutral or you are violating ethics and agency laws.

When you operate as a single agent you have a fiduciary duty to your client and work exclusively in their best interest and you can use any information given to you by the other agent against the other party to get the best deal for your client. This type of agency must be disclosed to the other agent and party, so they are put on notice that you are exclusively working for the best interest of the party who hired you and that anything said to them can and will be used in the best interest of the party who hired you (the client).

I think 90% of the agents out there still don't understand the difference between these two types of agencies and therefore are continuously doing the wrong things and exposing themselves to disciplinary actions by picking what they believe is appropriate for their situation. Most agents act like single agents when in fact they have contracted to act as transaction brokers. Before you take a listing or a buyer, explain to them the two agencies and your obligations and duties under each type of agency. You will be surprised how often they will expect you to act as a single agent.

Here is the real shocking truth: Because in Florida dual agency is illegal, if you represent the buyer and seller, or another agent working for the same Broker you work for represents the other party; then by law you must act as a transaction broker. So to simplify things and address these two common situations, most brokers and agents automatically start as transaction brokers so they can double side the transaction or help another agent in their office/company sell the property. The solution is simple however, start with a single agency that has a built-in authorization to transition to transaction broker for these two specific situations.

Professional courtesy must be in line with the type of relationship with your principal and their instructions. When in doubt, ask your principal what they want to do. It is OK to tell the other agent upfront that the existence and details of any other offer will not be disclosed as per instructions of the principal. It is also OK to tell the other agent that the seller is still thinking about the offer instead of giving them the silent treatment. It is also OK to call the other agent and tell them that the offer is too low and that the seller will not counter and request the other agent to ask the buyers to make their best offer. Be a pro and communicate with your fellow agents.

In my opinion professional courtesy is a requirement, but it does not mean crossing the line and disclosing things that shouldn't be. So stay within the confines of your disclosed transactional relationship, and make sure you select the representation that best suits your negotiation style and what your Buyer(s) or Seller(s) expect from you as their agent...

 

Posted by

Ben Giordano, MBA, MILHM, CDPE, REOS, Realtor

Waterfront Specialist. Visit our website for our unique coastal waterfront market statistics, listings, and sales information.

www.EliteWaterfront.com

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Topic:
Real Estate Best Practices
Tags:
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Rainmaker
895,352
Brian Madigan
LL.B., Broker
RE/MAX West Realty Inc., Brokerage (Toronto)

Ben,

 

Great post and very timely. I think that it's really closer to 99% of agents not understanding the situation.

The problem in part is that the laws vary from State to State and Province to Province.

The difficulty arises largely by the confusion caused by the industry itself. The real estate brokerages want to be the "agent" in a legal sense. They don't want the individual sales people to be the agents.

This causes an inherent problem. Dual agency is not wrong, but it's problematic. Sales people market their "negotiating skills", and then find that they can't truly negotiate in the deal for either party.

One of these days, this mess will get sorted out. But in the meantime we are left with this confusion.

So, rest assured, it's just as bad in Ontario as it is in Florida.

Brian

October 18, 2009 10:50 AM
Rainmaker
880,713
Joyce Kelley
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.
Charles Stallions Real Estate Services Inc

We operate as a sellers agent and a non relationship with all buyers. We explain this up front and we have never had a buyer walk or ask questions. I think they just want to buy a house. Sometimes I think all this legal mumbo gets into the way of the buyer and seller and that maybe why they don't trust agents.

October 20, 2009 11:26 AM
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Rainer
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Ben Giordano

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