May 17, 2019 Show
If and when you go to buy or sell a house, the distinction between hiring a single agent versus hiring a transaction broker has huge ripple effects that can make or break your deal. The best way to explain transaction brokerage is that the agent is there to help put a deal together, but they technically don’t represent you. That’s where people get confused. They might not exactly have your best interest in mind. This is because transaction brokerage relationships lack these four things: loyalty, confidentiality, obedience, and full disclosure. On the other hand, all of these things are present with single agency. “Single agency is the way to go.” How can you get the best deal for you and your family if you’re working with someone who doesn’t give you loyalty, confidentiality, obedience, and full disclosure? The answer is that you can’t. This is an issue that just doesn’t get enough attention so I wanted to bring it to yours today. The next time you are hiring a real estate agent, single agency is obviously the right way to go. If you have any questions for me in the meantime about single agency, the market, or about real estate in general, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon. Check out the links below for more information! The 2018 Florida Statutes Can You Get A Better Deal On Your Next Home Purchase? Connie Smith has been a licensed Florida realtor since 2003. She's happy to answer any questions you may have about Florida real estate. Compare single agency and transaction broker representation, and learn why dual agency representation is typically outlawed. Image by Harry Strauss from Pixabay What Is Agency?Dual agency is outlawed in many states, including Florida, where my real estate license is
held. The problem with dual agency is that pesky word, "agency." Agency in real estate terminology means that the sales associate (licensed agent) enters into a relationship with a client to whom she owes fiduciary duty, also known as obedience, loyalty, and confidentiality. She is working on behalf of that client in all matters pertaining to a specific real estate transaction. That is the definition of agency. In Florida, we refer to it as single agency. A simple and easy way to understand single agency is this: Think of a transaction as a theatrical performance. The agent is stepping in as an understudy to take over the role of the client in that performance. During that performance/transaction, the understudy/agent always acts in the best interests of the client—as though he was the client himself. Why Is Dual Agency Outlawed?Dual agency is just what it says it is: an attempt to act in both the buyer and seller’s best interest at the same time. Can an understudy play both starring roles at the same time—that of both the buyer and the seller—and act in the best interests of each at the same time? Of course not. It would be impossible. That is why dual agency is outlawed in most states. Enter the Transaction BrokerThat is not to say that an agent cannot handle the transaction for both the buyer and the seller. In Florida, we have a limited agency classification known as a transaction broker. While it sounds like dual agency, it is not. In this capacity, the agent is working for the transaction, but he has not entered into a fiduciary relationship with either party. That means he is a neutral party between the two. However, he owes both parties limited confidentiality. That means he is not allowed to tell the seller that the buyer will offer more or tell the buyer that the seller will take less without permission from the party in question. The Advantages of Transaction BrokersThere are many Florida real estate agents and brokerage firms that work strictly as transaction brokers. Firms that eschew single agency say that working as transaction brokers helps prevent some difficulties and confusion. The agent is not likely to forget what his role is if it is the same all the time. It also avoids possible lawsuits, which is possibly the better reason why some brokerage firms avoid it even in circumstances where the law allows it. The chart below outlines the differences between the two types of agency. The limited transaction broker relationship offers only limited confidentiality and no obedience or full disclosure. (See the section on full disclosure below for more information.) Do not be overly concerned over the lack of full disclosure. The transaction broker must still disclose to a buyer “all facts known to the broker that are not readily observable by the buyer and which have the potential to materially affect the value of the property.” Differences in Agency Relationships: Florida
Why Choose Transaction Broker Representation Over Single Agency?It seems a no-brainer that a client would want to have single agency representation rather than a transaction broker. However, there are some good reasons why a single agent might need to transition from single agency to become a transaction broker:
The law recognizes that each agent of the firm might have special knowledge, and so the firm is unable to offer confidentiality to the client. In fiduciary relationships, the client has agency with the brokerage firm that the agent works for, so two agents of the same firm cannot offer single agency, only a transaction broker arrangement. Remember: The agent is not allowed to tell the seller that the buyer will offer more or tell the buyer that the seller will take less without permission from the party in question. What About the Lack of Full Disclosure?The lack of full disclosure under the transaction broker relationship should not bother the client. It does not mean that the transaction broker agency can hide things from you. Again, the notice plainly says, "Disclosing all facts that materially affect the value of residential real property and are not readily observable to the buyer." What it does mean is that the agent is not under obligation to tell you everything. In a single agency relationship, if the buyer's agent (from another firm) indicates his buyer will pay more, single agency requires the seller's listing agent to inform the seller of that when he presents the buyer's offer to him. As a transaction broker, the agent is not even allowed to go there without permission, even if he has that privileged information. As the official Florida Association of Realtors © Transaction Broker Notice proclaims:
Choose a reputable firm and an experienced agent to ensure a smooth transaction. Image by Photo Mix from Pixabay From an Agent's PerspectiveWhen I am the transaction broker for both the buyer and the seller, both sides get treated fairly. Every agent I know does the same. Still, as an agent, my preference is to be able to give my client or customer 100% of my attention. I can still do that as a transaction broker by working for only the buyer or the seller in a co-op agreement with another agent or agency. The agency relationship that the other agent has with their buyer or seller is strictly their decision and doesn't affect the status of my relationship with my customer at all if they work for another company. A single agent can work with a transaction broker. The best way to ensure that your transaction goes smoothly and that you end up as a satisfied customer is not in the agency relationship. It is by choosing a reputable firm and an experienced agent to work with initially. The agent doesn't have to have years of experience, but she or he should be able to access the necessary resources in order to navigate you through your transaction. An Agent's Ultimate GoalMy goal as an agent in Tampa Bay—and that of most the agents I know, whether a single agent or transaction broker—is for you to be totally satisfied with our services. We hope to retain you as a client for many years to come. We also hope that you are so happy, you refer your friends and family as well. That is the lifeblood of a real estate agent's business. This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters. Questions & AnswersQuestion: What if a transaction broker takes the seller's side? Answer: I’m a bit unclear on what you are asking: what if the transaction broker is the seller’s agent while the buyer has his own transaction broker or single agent or what if the transaction broker for both is actually looking to the interests of the seller instead of the transaction? The first scenario is perfectly acceptable. The second is not. A transaction broker should treat both parties equally. He or she owes the same level of service and diligence to both parties without preference. If they are giving representation to one party over the other, that is certainly something to discuss with that agent and his broker. That’s what I would do. © 2012 Connie Smith Vicki on May 07, 2019: No you aren't missing anything agents now control the inventory and drive you around. The rest is up to your attorney, they represent themselves and yep basically suit free.. Julie on January 05, 2017: I specialize in a niche market and often act as a dual agent. It is hard not to, since I am so often showing my properties to my buyers, since that is who I market to. You say that in dual agency that you can not work in both the buyer's and seller's best interest at the same time, yet I assume as a transaction broker you are saying you can? I am still not clear as to the difference in Transaction and Dual. As a dual agent, I can't tell a client what to offer or accept. Information is confidential between the two parties unless permission is given in writing by either party, yet material facts must be disclosed. The only difference I see is that the agency is protecting itself, by saying they don't owe loyalty and obedience to either client, therefore can't be sued if disputed? I know I must be missing something. SC just started allowing transaction brokerage, so I want to be clear when I am explaining the difference between dual and transaction (not single, that is obvious). Thank you. Connie Smith (author) from Tampa Bay, Florida on November 27, 2016: Hi Sue, sorry...just saw this. The client signs the disclosure. That shows that they have read it and understand the duties of their agent. Now in Florida, a disclosure doesn't have to be signed if the agent is acting as a transaction broker. It is presumed by law. Though I think our statutes deal very fairly in regards to most real estate laws, I think that the legislature probably got that one wrong. So many people come here from other states and even when they already are here, they aren't reading the statutes for fun. The potential buyer might presume that their agent is a single agent when they are not. Sue on November 11, 2016: Who signs the Single agent disclosure form, the agent or the buyer? Connie Smith (author) from Tampa Bay, Florida on September 10, 2016: I understand your concern but I'm not sure you quite understand the responsibilities of fiduciary duty. Whether the agent works as a single agent or a transaction broker in that first scenario you described, prescience is not one of the duties of a single agent. It is the buyer's duty to discover any defects during the inspection period. There are many transactions for both houses and condos that fall apart during the inspection period (aka due diligence) and even further along on the transaction. I can only say that if the agent does the job right, that the buyer should be eligible to get their deposit back if the financing falls through, per the contract. I just had one where the seller (Fannie Mae) didn't disclose that an oil tank was removed and helical piers placed underneath the foundation of a single family property to remove contaminated soil. They had a 156 page report that we didn't get until we were over 60 days into the transaction and only after three general contractors and an inspector had looked at the property and not said a word about it. The fourth contractor mentioned that there had been a problem so I addressed it with the seller's agent and got the report. My buyer is moving forward. It was repaired, but what if it had not been? Also, what if the current seller didn't know about the oil tank that was placed there in 1965 that was contaminating the soil? If not, they are under no obligation to disclose that to you which they do not know any more than an agent is. If it was discovered late into your transaction and the current seller wouldn't remedy...well, there are all kinds of scenarios like this. The lender may not finance based on an issue discovered in the late stages of a contract. I am only giving one, but in your scenario, that wouldn't likely be the fault of the agent, acting in either capacity -- unless the agent had previous knowledge that there was a problem in that community, which answers your last question. Why would an agent withhold any information, knowing the transaction is not going to take place? Every agent I know doesn't want to work for free which is what happens when a deal falls through for whatever reason. When I am asked whether a house or condo ownership is better, I always say that is up to the individual tastes of the buyer. Both a house and a condo may fall under the most minute form of government there is -- that of a condo association or homeowner's Association. In Florida, where I am licensed, a buyer has three days after receiving the CONDO documents to change their mind and cancel the purchase. The documents include the rules of the association and the budget. I capitalized "condo" because the purchaser of a property in an HOA doesn't have that same right to cancel based on the documents. While I happen to think this is a very weak area of Florida real estate law and needs improvement, usually the budget isn't as important in an HOA. However, that also depends on the community and what the HOA fees cover. Still, the rules are be very important. Are those rules a framework that you can live by? HOAs can fine you just like condo associations can for not following the rules and get even take your property if you don't comply through foreclosure. It is a buyer's choice to make, not the agent's. Both types of ownership have advantages and disadvantages. Weigh the options and decide. I will usually show both and they then pick which one they feel is suited to their lifestyle. If it doesn't work out, I will do my best to find something that does. Sorry if you lost out on the other place you were interested in, but you made the choice, not me... So...no. Ultimately, I do not think that an agent without specific knowledge who answers your question in either capacity would be liable no matter the agency. However, a court may decide that the agent SHOULD have had that knowledge if it is generally known. In that case, being a transaction broker doesn't relieve you of responsibility to disclose material facts so I doubt the agency relationship would make a difference to a court. At any rate, that is a legal decision that would be decided there. Also, keep in mind that your choice of lender may affect whether your choice is qualified for financing. What one lender denies, another may approve. Lastly, most agents, including myself, are not attorneys. Anytime that you feel the need, you should consult an attorney, and so you should to get a definitive answer to your questions above. Bottom line, all my clients know that. Connie Smith on September 10, 2016: I understand your concern but I'm not sure you quite understand the responsibilities of fiduciary duty. Whether the agent works as a single agent or a transaction broker in that first scenario you described, prescience is not one of the duties of a single agent. It is the buyer's duty to discover any defects during the inspection period. There are many transactions for both houses and condos that fall apart during the inspection period (aka due diligence) and even further along on the transaction. I just had one where the seller (Fannie Mae) didn't disclose that an oil tank was removed and helical piers placed underneath the foundation of a single family property to remove contaminated soil. They had a 156 page report that we didn't get until we were over 60 days into the transaction and only after three general contractors and an inspector had looked at the property and not said a word about it. The fourth one did. My buyer is moving forward. It was repaired, but what if it wasn't? Also, what if the current seller didn't know about the oil tank that was placed there in 1965 that was contaminating the soil? If not, they are under no obligation to disclose that to you which they do not know any more than an agent is. If it was discovered late into your transaction and the current seller wouldn't remedy...well, there are all kinds of scenarios like this. I am only giving one, but in your scenario, that wouldn't be the fault of the agent, acting in either capacity -- unless the agent had previous knowledge that there was a problem in that community, which answers your last question. Why would an agent withhold that information, knowing the transaction is not going to take place? Every agent I know doesn't want to work for free which is what happens when a deal falls through for whatever reason. When I am asked whether a house or condo ownership is better, I always say that is up to the individual tastes of the buyer. Both a house and a condo may fall under the most minute form of government there is -- that of a condo association or homeowner's Association. In Florida, where I am licensed, a buyer has three days after receiving the CONDO documents to change their mind and cancel the purchase. The documents include the rules of the association and the budget. I capitalized "condo" because the purchaser of a property in an HOA doesn't have that same right to cancel based on the documents. While I happen to think this is a very weak area of Florida real estate law and needs improvement, usually the budget isn't as important in an HOA. However, that also depends on the community and what the HOA fees cover. Still, the rules are be very important. Are they rules that you can live by? HOAs can fine you just like condo associations can for not following the rules and get even take your property if you don't comply through foreclosure. I always say tell my buyers to decide whether they want to live under that HOA rule. So...no. Ultimately, I do not think that an agent without specific knowledge who answers your question in either capacity would be liable no matter the agency. However, a court may decide that the agent should have had that knowledge and in that case, being a transaction broker doesn't relieve you of responsibility to disclose material facts so I doubt the capacity would make a difference. At any rate, that is a legal decision that would be decided in court. Concerned on September 10, 2016: I may be unclear hear but I tend to consider the source and what is being communicated especially with regards to "agency." I'd rather hear this discussion from an attorney who specializes in real estate and contract law. My concern is one of due diligence on the part of the realtor (agent/broker) in terms of representation. For example if I was a buyer, and asked for the pro's and cons of homeownership vs condo ownership, what would happen if I placed a contract on a condo and then could not get conventional financing because of some association issue....insufficient master policy insurance coverage, or not enough owner occupied residents or a number of possibilities outside of what otherwise I would normally qualify for financing? In the mean time a home I would have put an offer and received financing on is sold. Any difference in liability or recourse for me based on agency relationship? Would it be material fact for the agent to know that conventional financing in that particular condo was unlikely and only cash buyers need apply? Jon Zolsky on September 07, 2016: I understand that this is an old post, but it is still excellent :) It really is. I am a broker, always operate as transaction broker, but reading it was very useful for me, as it is perfectly articulated. Connie Smith (author) from Tampa Bay, Florida on August 18, 2016: Occasionally when I look back at something I wrote, especially a year later, I see a mistake and I certainly did in my last comment. I don't want to take it down so I will just make my correction here. I said: "Either way, I treat my clients the same really in either category and give them the fiduciary care they deserve." That isn't really correct as we are not in a fiduciary relationship. However, I do give them the same care and diligence AS IF we were in a fiduciary relationship -- within the framework of the law -- and so do most other agents I know . Connie Smith (author) from Tampa Bay, Florida on July 24, 2015: Thanks, Robert! I definitely appreciate the comment. Florida law now assumes that an agent is a transaction broker unless the agent gives a single agent notice to the client -- even when dealing with another agency. In other words -- unless you sign a single agent notice, your agent is a transaction broker. When I initially wrote the article, it was the other way around. I don't have a problem working as a single agent and often do. Either way, I treat my clients the same really in either category and give them the fiduciary care they deserve. As far as I can see, so do most of the other agents in my office as do most of the other agents I have worked with on transactions from other companies. If they are working as a single agent, they also have to give us the signed notice so we know as well. Robert Castillo on July 23, 2015: This post was seriously GREAT! Cleared up all my confusions, can't thank you enough. Connie Smith (author) from Tampa Bay, Florida on December 16, 2013: Hi Jeff. So glad I could help! There is no form to fill out because like the term reads, he becomes a broker for that transaction. If the transaction doesn't happen, he is still free to be your single agent. If the scenario that you described becomes a reality, you can always ask for an updated single agency notice upon the transaction fail if you feel unsure about your agent's status for the next transaction. I am sure your agent will be happy to accommodate you! Jeff Hale on December 16, 2013: I just wanted to say thanks for finally adding the common-sense answer to "why" in this heading: Why Choose Tranaction Broker over Single Agency? I must have researched for an hour and could only find that a broker can transition from a single agency to transaction broker. I'm a buyer and my agent wants me to sign an exclusive contract with them and I have never bought real estate in Florida. So, this is all new to me. They have checked the checkbox that says "BROKER RELATIONSHIP: single agent of Buyer with consent to transition into a Transaction Broker" I naturally thought...why do I want my agent to become less loyal to me if they want to ? Pretty good question really. Anyway, thanks for explaining that my agent might end up finding a house that they are the selling agent for. However, that does raise the question; is there a form to fill out that turns them back into a single agent if I happen not to care for the property that they were the selling agent for? Darline Kilpatrick from Delaware on March 03, 2012: Thanks for the free real estate info, it was very interesting! It is heartbreaking when a transaction falls through at the last minute. How is a transaction broker different than an agent?The key difference between the two is that a transaction brokerage represents neither party. This means that when an agent is acting as a transaction broker, they are not invested in the deal at all. So they can give neutral advice and assistance to both parties.
What is a transaction broker in FL?A transaction broker provides a limited form of representation to a buyer, a seller, or both in a real estate transaction but does not represent either in a fiduciary capacity or as a single agent.
What is a single agent?A Single Agent is defined by Florida Statutes Chapter 475, Part I as a broker who represents either the buyer or seller of real estate, but not both in the same transaction. It is the highest form, providing the most confidence to the customer that the Realtor represents only the customer's interest.
What is a single agency broker?The real estate term "single agency" means that a broker or agent will represent the interests of either the seller or the buyer. They may act as either the listing agent or the buyer's agent, but not both. The agent will sit on only one side of the transaction.
|
What is the difference between a transaction broker and a single agent in Florida?
zusammenhängende Posts
Urheberrechte © © 2024 defrojeostern Inc.
