Real Estate · Agency Relationships

What is the difference between a 'buyer's agent' and a 'transaction broker'?

Correct answer

A buyer's agent owes full fiduciary duties to the buyer (loyalty, confidentiality, obedience, disclosure, accounting, reasonable care); a transaction broker (also called a facilitator or non-agent) assists both parties with the mechanics of the transaction without owing full fiduciary duties to either

  1. A A buyer's agent owes full fiduciary duties to the buyer (loyalty, confidentiality, obedience, disclosure, accounting, reasonable care); a transaction broker (also called a facilitator or non-agent) assists both parties with the mechanics of the transaction without owing full fiduciary duties to either
  2. B A transaction broker only works on commercial deals
  3. C A buyer's agent must be paid by the buyer; a transaction broker is paid by the seller
  4. D They earn different commissions

Why this is the answer

BUYER'S AGENT (Buyer Representation): The agent is the buyer's fiduciary — fully loyal to the buyer; discloses everything relevant; maintains confidentiality of buyer's motivations and limits; negotiates in buyer's interest. TRANSACTION BROKER (Non-Agent / Facilitator): In states that permit this (Florida, Colorado, Minnesota, and others), a transaction broker assists both parties with the transaction without representing either — they are a 'middle man' who facilitates without advocating. They still: must be honest and accurate; facilitate paperwork; are prohibited from using confidential information of either party against the other. The distinction matters for: what the practitioner can and cannot do; what disclosures are required at the outset of the relationship; what duties the client can rely on. Disclosure of which relationship exists is required in most states at first contact.
Source: Real Estate Broker Exam, Buyer's Agent vs Transaction Broker

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About this topic: Agency Relationships

Agency relationships at broker level cover creating and terminating agency, dual agency and designated agency, fiduciary duties, and how the broker's agency extends to the licensees in the office. This is one of 6 Broker (National) questions on agency relationships, each with a full explanation on a single study page.

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