If you are looking to buy or sell a property, you would typically look to a real estate agent to help you throughout this process. Although real estate agents can definitely help, you may also want to consider working with a transaction broker. Transactions brokers can be much more cost-effective than the traditional real estate agent. What exactly do transaction brokers do?
Here is everything you would need to know about partnering with a transaction broker to see if one would fit your needs.
Who is a Transaction Broker?
To start, let’s answer the question “what is a transaction broker?” A transaction broker is someone who acts as a mutual resource throughout a real estate transaction. This person can give advice to both the seller and buyer in a real estate transaction and doesn’t represent a single party. A transaction broker is typically a licensed real estate agent who understands how real estate transactions work. Their main job is to help all parties involved in a real estate transaction ( buyer and seller) with any difficult tasks that may come up. Although they are supposed to help with difficult tasks, a real estate transaction agent is not supposed to influence the decision on the sale itself or give advice on anything that directly influences the transaction.
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Who does a Transaction Broker Represent?
A transaction broker can represent either the seller or buyer of a property or both at the same time. If they are in contract with a seller, they are responsible for guiding the sellers through the entire selling process, making sure the property gets sold. If the transaction broker is in contract with potential buyers, they are responsible for helping the buyers with everything needed to purchase a property. Additionally, a transaction broker can represent both the seller and buyer concurrently, by facilitating conversations between the two. A transaction broker is a mutual third party who is neither more advantageous nor disadvantageous for the seller or buyer. They are just there to guide each other through difficult tasks.
What do Transaction Brokers Do?
What are a transaction broker’s responsibilities? The specific transaction broker duties can vary depending on what state the real estate transaction is occurring in. These are some common duties of transaction brokers despite location:
- To assist a potential buyer in preparing an offer for a property, acting as the buyer’s agent.
- To act as a mutual third party for both the buyer and the seller, facilitating communication between the two.
- To help both the buyer and seller navigate difficult tasks.
- To assist the sellers with generating a competitive asking price for a property, acting as the seller’s agent.
- Is responsible for creating the contract to sell and buy a property for both parties.
- To be a resource for the buyers during the closing process.
What is the Difference Between a Transaction Broker and a Real Estate agent?
You may be asking yourself the question “what is a transaction broker compared to a real estate agent”? A transaction broker and a real estate agent are very similar positions in terms of processing a transaction in real estate. Ethically and legally, both a real estate agent and a transaction broker are meant to follow the same standards. They both are meant to assist whomever they are in contract with while adhering to the laws of that state. Both a transaction broker and a real estate agent are professionals and qualified to help an individual sell their property, or provide guidance to buyers looking to purchase a property.
The main difference between a transaction broker and a real estate agent is that an agent only looks out for the best interest of their client. For example, a real estate agent for a buyer works directly for that buyer, ensuring a competitive offer is put towards the property they are interested in purchasing. They also would read through the purchase contract to make sure all of the needs of their client, the buyer, are met.
This differs from a transactional broker as a real estate transaction agent would not give any advice to a buyer on a specific price to offer for a property. This is because the transaction broker is also looking out for the needs of the sellers. Suggesting an offering price could be considered more advantageous to one side if that price is much higher or lower than other offers. Additionally, a transaction broker will not help sellers navigate through their offers.
What is the Difference Between a Transaction Broker and a Dual Agent?
A dual agent is someone who has a legal relationship with both the buyers and the sellers. This means they legally represent both parties while real estate agents typically just represent one side. Additionally, dual agency is when the same brokerage represents the buyer and the seller, even if the two have different agents.
A transactional broker is not a dual agent because they represent neither party. They are a mutual third party who has the best interest in mind for both parties, as they legally represent neither.
What are the Benefits Of a Transaction Broker?
Real estate agents and dual agents can get very expensive when throughout the home buying or home selling process. A transaction broker tends to be much less expensive, saving you money. Transaction brokers tend to cost less than traditional professionals such as real estate agents or dual brokers because they do not carry as much liability as traditional agents. They have no legal responsibility in any part of the real estate transaction. They are simply there to provide help and guidance through tough decisions and tasks as a mutual third party.
An additional benefit of a transactional broker is they only charge for the specific services you require. This also is why they tend to be more cost-effective than a traditional real estate professional. Most traditional real estate agents or dual agents charge you for all services they provide, not just the ones you need. Transactional brokers only will have you pay for the direct services they provided you.
What are the Risks of Hiring a TB?
As transaction brokers hold no legal responsibility for their services, that means they cannot be held responsible under the law if something were to go wrong. Only real estate agents or dual agents have legal responsibilities when it comes to a real estate transaction. Transaction brokers hold no fiduciary responsibility.
One other downside of a transaction broker is the fact that they cannot advocate for either party. They cannot persuade a seller to sell at a certain price or accept a certain offer just as they cannot persuade a buyer to buy a certain property. This could cause issues if the seller and buyer of the same property use the same transactional broker. Transactional brokers only can provide guidance through tasks for sellers and buyers, without advocating for either side. Only real estate agents are able to help with negotiations between buyer and seller.
How Much is a Transaction Broker Commission?
What is a transaction broker commission compared to a traditional real estate agent commission? Rather the getting paid a commission, transaction brokers more often charge a flat fee. A transaction broker fee would be charged to both parties ( the sellers and the buyers) when closing on a home) and you would be made aware of how much this fee is prior to working with them. Transaction brokers usually charge a flat fee rather than take commission because by definition they are not really a broker, but a middleman. A typical fee range for a transaction broker is between $250 – $495. This range varies based on geographical location and the current real estate market.
Are Transaction Brokers Helpful?
A transaction broker is helpful when both parties are looking for help within managing their real estate transaction. Transaction brokers are not allowed to give advice or steer you towards certain financials about a property but can help you navigate difficult tasks through the deal. They are great for creating contracts to make sales official and or making sure transactions are done fairly. Although they cannot legally do everything a real estate agent can do, sometimes you are not looking for services discussing financials and are just in need of a mutual third party to make sure a transaction runs smoothly.
This article answers the question of what is a transaction broker and what do they do. Transaction brokers are a mutual third party throughout a real estate transaction. They act as a middle man between the seller and the buyer and can give advice to both parties while facilitating the negotiation. They have much fewer legal obligations than a traditional real estate agent or duel agent but are great for making sure a transaction runs smoothly. They typically do not take a commission, but rather charge a flat fee for their services. Both the seller and the buyer will be aware of the fee before they agree to work together. Before you need the help of a transaction broker, you need to find a property to purchase. Use Mashvisor to start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here to view properties.