What Is a Transaction Broker and Do I Need One?

Richard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.

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If you’re considering transferring a property to a family member, selling your home to a friend, or buying one from someone you know, you might be asking, “Do I need a real estate agent?” For these and other situations, you may want to hire a transaction broker.

Understanding what a transaction broker is and determining if you need one could simplify your real estate deal.

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What is a transaction broker?

A transaction broker acts as a neutral third party in real estate transactions, assisting both the buyer and the seller without representing either party’s interests over the other.

Unlike traditional agents who work exclusively for the buyer or seller, transaction brokers provide a balanced service, focusing on facilitating the transaction efficiently. Their role is to ensure that the process runs smoothly, adhering to legal and ethical standards without the bias of advocating for one side.

What does a transaction broker do?

Transaction brokers can play a pivotal role in the mechanics of buying and selling property. Their duties include:

• Helps set a home listing price: They use their market knowledge to help sellers set a realistic price for their home.
• Prepares offer letters: For buyers, they prepare competitive offer letters to help secure their desired property.
• Writes the sales contracts for both buyer and seller: They ensure that the sales contract is fair and legally binding for both parties.
• Handles buyer-seller communications: Transaction brokers facilitate communication between the buyer and seller, making sure information is exchanged efficiently and transparently.
• Coordinates the arch and pace of transaction: They keep the transaction moving by coordinating inspections, appraisals, and other necessary steps.
• Assists with closing the sale: From ensuring all paperwork is in order to coordinate the closing process, they help finalize the sale.

When might I use a transaction broker?

Typically, a transaction broker is ideal in scenarios where the need for a neutral party outweighs the requirement for a representative to negotiate aggressively on your behalf. Here are the most common situations:

• Selling a property to a family member or friend: When you’re transferring property within your personal network, the focus might be on a fair, straightforward process rather than marketing or negotiating for the best price.
• Buyer and seller are real estate professionals: In cases where both parties have a strong understanding of the market, a transaction broker can serve as an impartial facilitator, ensuring the transaction adheres to legal and ethical standards.
• Selling FSBO but need advice: For those opting to sell their home “For Sale By Owner” but who require guidance on pricing or contract details, a transaction broker can provide valuable assistance without the need for full agent services.

Transaction broker vs. traditional agent

Understanding the differences between a transaction broker and a traditional real estate agent is important so that you can make an informed decision about who you want to hire to manage your property deal.

First, it should be noted that both transaction brokers and real estate agents typically have the same formal training to receive a real estate license. However, to become a transaction broker, agents must work in the industry for a few years and then take additional training courses to be certified. This allows them to be licensed to work by themselves and run their own business. Most agents, on the other hand, must work with a real estate broker.

Here are the key distinctions between a transaction broker and a traditional agent:

• Acts as a neutral party: Unlike traditional agents who advocate for one side, a transaction broker offers balanced support to both the buyer and the seller.
• Can openly share information: Transaction brokers are not bound by the same confidentiality rules that agents are, allowing them to share more information freely between parties.
• Typically charge a flat fee: Rather than earning a commission based on the sale price, transaction brokers often charge a flat fee for their services, potentially saving you money.

What about a ‘transaction coordinator’?

You may come across another real estate worker called a “transaction coordinator.” A transaction coordinator is typically someone hired by a real estate agent or broker to help complete a home sale or purchase. While a transaction coordinator can help with some of the same tasks as a transaction broker, they typically have less experience and are not required to have a real estate license.

Is it legal for me to use a transaction broker?

Yes, using a transaction broker is legal in many jurisdictions. However, real estate laws vary by state, so it’s important to check your local regulations. In states where transaction brokers are recognized, they are subject to specific legal and ethical guidelines designed to protect all parties involved in a real estate transaction.

How does this compare with dual agency?

Transaction brokerage and dual agency both involve a single intermediary working with both the buyer and the seller. However, there are notable differences:

• Dual agency: In a dual agency scenario, the agent represents both the buyer and seller in the same transaction, which can create conflicts of interest and limit the agent’s ability to advocate fully for either party’s best interests. For this reason, dual agency is illegal in some states.
• Transaction broker: On the other hand, a transaction broker does not represent either party’s interests. Instead, their focus is on facilitating the transaction process impartially, reducing potential conflicts of interest and ensuring a fair process for both sides.

Are there risks with using a transaction broker?

While transaction brokers can offer significant benefits by streamlining the real estate process and potentially lowering costs, there are certain risks to consider before deciding to use one:

• May not be held legally responsible if something goes wrong: Because transaction brokers do not have a fiduciary responsibility to either party, their legal obligation to you is limited. If a critical issue arises, their neutral stance means they might not be accountable in the same way a dedicated agent would be.
• Can’t act as your advocate in the home sale: If you’re looking for someone to champion your interests, whether you’re buying or selling, a transaction broker’s impartiality means they won’t take your side.
• Cannot help you with negotiations: One of the biggest drawbacks is the lack of negotiation support. If you’re not comfortable negotiating or if you’re unsure about market values, you might be at a disadvantage without an advocate to negotiate on your behalf.

How do I find a transaction broker?

Finding the right transaction broker involves a few key steps to ensure you partner with a professional who understands your needs and the specifics of your real estate transaction. Here are some tips to guide you:

• Ask an existing agent team: Most top real estate agents are willing to provide a free consultation, and many have a team of experts ready to help you build a plan for your buying or selling needs. Ask a seasoned agent if they have a transaction broker on their team.
• Search online forums: Online real estate forums, local real estate association websites, and reviews can provide insights into their reputation and expertise.
• Ask for referrals: If you know anyone who has used a transaction broker, ask about their experience. Personal referrals can lead you to trusted professionals.
• Check credentials: Ensure any transaction broker you consider is licensed and in good standing with state and local real estate regulatory organizations. It’s also worth checking if they have any special certifications related to transaction brokerage.
• Interview potential brokers: Meeting with potential brokers can help you gauge their understanding of your needs and how well they can communicate the process. Ask about their experience, approach to neutrality, and how they handle potential conflicts of interest.
• Understand their fees: Clearly discuss how the transaction broker will charge for their services. Knowing whether they charge a flat fee or have a different pricing structure is essential for your financial planning.

Is a transaction broker the best option for you?

Deciding whether a transaction broker is the right choice for your real estate needs depends on several factors. If you value neutrality and are comfortable with handling negotiations yourself or don’t need aggressive negotiation on your behalf, a transaction broker could be a good fit.

This option is especially appealing in scenarios where both parties already agree on the main terms of the sale or when transactions occur between parties who trust each other, like family members or friends.

Don’t rule out a top agent

However, if you’re looking for someone to actively represent your interests, provide detailed market analysis, and negotiate aggressively on your behalf, a traditional real estate agent might be better suited to your needs.

Additionally, if you’re new to real estate transactions or if you’re engaging in a complex deal, the comprehensive support and advocacy of a traditional agent could provide invaluable peace of mind.

HomeLight can connect you to the highest-rated real estate agents in your community. These top agents can provide expert advice about your home selling or buying situation. Many of these elite agents will employ or have connections to trusted transaction brokers with the experience you need.

Header Image Source: (paulbr75/ Pixabay)

1. "What Is a Transaction Coordinator?", U.S. News (June 2023)
2. "Dual Agency In Real Estate: Everything You Should Know", Forbes (June 2023)
3. What is a fiduciary?", Consumer Financial Protection Bureau (June 2023)

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

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Richard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.

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