While there are several different types of real estate agents, each state has its own set of laws regarding how real estate agents may interact with buyers and sellers.
Q: As a Realtor in Florida, I read your articles in our local paper (Sarasota Herald/Tribune). I think you should have clarified that each state has different rules regarding agency representation. In Florida, we are deemed to be transaction brokers and that is what almost all Realtors are as a default. We have limited representation. We are not dual agents. Very few choose to be single agents, and if they do, then that must be disclosed in writing to both parties.
A: We think you must be referring to our article on a homebuyer looking for a “buyer-only” real estate agent. Yes, we should have noted that each state has its own peculiar laws regarding how real estate agents may interact with buyers and sellers. But the gist of our answer was to describe generally how buyer and seller real estate agents work with their customers.
A seller real estate agent will only work for the seller and only have the seller’s interest at heart. A buyer’s broker will only work for the buyer and only have the buyer’s interest at heart. As you describe it, you’re a “transaction broker” and you don’t appear to have a duty of loyalty to either the buyer or seller.
We think it’s unfortunate when a real estate agent is only a “transaction” agent and does not owe a duty to either party. When a seller is selling the most important asset of her life, she should be surrounded by people that have her best interest in mind, particularly when the listing agent (also known as the seller’s agent) will earn a commission of around 6 percent of the sales price of the home, which is then shared with the agent who is supposed to be representing the buyer in the transaction.
We know why states have enacted such laws – to keep agents from legal jeopardy if they wind up representing both sides of a single transaction or say something they shouldn’t – but we think it’s a huge mistake to decouple an agent’s interests from his or her clients.
We’d rather see real estate agents be clear about who they really represent and be careful about how they handle those transactions. When agents represent the “transaction” and say they are “transactional agents,” they are really saying they only care that the deal closes whether or not the sale or purchase is in the best interests of the buyer or seller.
As technology changes the market place, we worry that real estate agents that are only transactional agents will lose out to technology.
If a buyer knows that her agent doesn’t have her best interests at heart, she might as well shop online for a home and seek out homes by herself. On the other hand, a seller may rather pay a discount broker a fee to show a home and save money along the way with a reduced commission, as the seller comes to realize that the listing broker is there only for the transaction and not for the seller.
Yes, many states have different ways treating real estate agents and their interactions with buyers and sellers. Our article disclosed the different type of agents and as you have pointed many states have different rules relating to real estate agents and you’ve drawn our attention to real estate agents that are transactional agents only. Thanks for your comment.