What is transaction brokerage (TB) in the real estate world? Put simply, it's right there in the name: an agent acting as a transaction broker is not representing any one party in the transaction. The home seller acts in their own interest and the buyer acts in their own interest. The broker does not advise or favor any one party, rather facilitates the negotiation and execution of a contract between the two parties. Pretty simple, right?
Yes and no! Transaction brokerage services can be ideal in any number of situations. In the case of a home seller, not everyone needs agency-level services; these sellers may include home builders, very experienced home sellers, for-sale-by-owners, or a home seller who has already identified their buyer prior to going on the market. TB may not be the right fit for home sellers who could benefit from the professional opinion and advocacy of a local Realtor, such as first time sellers. We believe most home sellers will actually fall into the latter category.
Transaction brokerage may not make sense for most home buyers either. And here's why: most often, by-and-large, the commission in a real estate transaction is paid by the seller. If this is indeed the case, there's really no reason to request that your agent be a transaction broker instead of a Buyer's Agent. They're pretty much getting paid the same way, so long as the listing agent isn't offering less commission for a transaction broker. Why pay the same thing for less service?
In many parts of the real estate world, agents won't even offer TB services, and even if they do, they don't charge the seller any less than what they charge for full agency. We can't really wrap our heads around why anyone would agree to that situation. Here at R+K, we love to offer TB services, but we do so on a consultation basis only. It's not on the menu for everyone, for the reasons listed above and more. But, for those home sellers whom TB may be a good fit, the cost savings can reach into the tens of thousands of dollars!
Such was the case for a recent client of ours: This client was very experienced in buying and selling houses over many years. They had a legal background and could have sold it themselves. But, they also saw the value in being marketed by a Realtor and having their home featured on the MLS. After a couple failed attempts to sell with other agents, they enlisted us to sell as a transaction broker. We sold their house in 5 days! This seller was able to lower their asking price and ended up netting the same level of sale proceeds. This gave them the advantage of a more competitive asking price when finding their buyer. In this case, they saved over $10,000 in commissions!
Even if a transaction broker is not representing anyone in the transaction, there are still certain levels of professionalism they must adhere to. They must be honest, they cannot misrepresent themselves or the property, they must disclose what they know, they must use skill and care and they must protect the information of the parties involved. They communicate and facilitate the transaction, and make sure that real estate state laws are adhered to. That being said, they cannot provide legal advice. But of course, no Realtor can do that!
To conclude, a real estate agent can act in three basic ways: as a Seller Agent, a Buyer Agent, and as a transaction broker. In most cases it makes perfect sense to hire an agent to actually represent you. But for some, this may not be necessary. We know this may not be the most exciting topic in the world, but it might be exciting for home sellers interested in finding a real estate company that advertises TB!
You can find out more about our Seller Services Here.
