Understanding the role of a transaction broker ensures buyers and sellers know whether they’re working with a neutral facilitator rather than a dedicated advocate. Clarity on this distinction helps manage expectations, avoid surprises in representation duties and choose the agency relationship that fits your needs.
This guide is ideal for homebuyers, sellers and real estate professionals seeking a clear definition of transaction brokerage, its benefits, limitations and how it compares to other agency relationships.
A transaction broker is a neutral third party who assists both the buyer and the seller in completing a property transaction without representing or advocating for either side. Unlike traditional agents who owe fiduciary duties to their clients, a transaction broker provides limited services such as facilitating communication, preparing offers, coordinating inspections, handling paperwork and ensuring a timely closing, all while maintaining impartiality and avoiding conflicts of interest.
Transaction brokerage developed as a response to the conflicts inherent in dual agency. Starting in the 1980s, state legislatures introduced non-agency or transaction-broker models to offer a solution that protects parties by assigning a neutral facilitator. Over time many states adopted specific statutes to define and regulate the role of transaction brokers.
Transaction brokers do not owe a fiduciary duty of undivided loyalty. They cannot provide advice or advocate for one party over the other, nor can they make strategic recommendations about negotiating tactics, pricing or terms.
While transaction brokers must treat all parties fairly, they must also maintain confidentiality regarding non-public information, such as a buyer’s willingness to pay more or a seller’s willingness to accept less. Material facts that affect the property’s value or safety must be disclosed to both sides.
A single-agent represents exclusively either the buyer or the seller and owes full fiduciary duties including loyalty, obedience, disclosure and confidentiality.
A dual agent represents both parties with limited fiduciary duties but must secure written consent and faces potential loyalty conflicts. A transaction broker remains a neutral facilitator without fiduciary obligations to either side.
Designated agency allows separate agents within the same brokerage to represent buyer and seller exclusively. In contrast, a transaction broker has no exclusive representation and handles the deal impartially.
Transaction brokers facilitate negotiations by preparing and presenting offers, but they cannot advocate for more favorable terms or provide strategic bargaining advice. Parties often rely on attorneys or consultants for advocacy.
Commissions are typically split between buyer and seller or negotiated as a flat fee or percentage. In some cases, shared fees can lower overall costs compared to exclusive representation.
State laws require transaction brokers to provide written disclosures outlining the non-agency relationship and scope of services. These disclosures must be signed at the first substantial contact.
Regulations differ by state. Some require signed consent forms, prohibit dual agency or set specific guidelines for transaction brokers. Always check your local real estate commission website for current rules.
Imagine Alice wants to sell her home while her friend Bob wishes to buy it. A transaction broker facilitates the sale by managing all paperwork and communications without advocating for either Alice or Bob.
The broker shares only agreed-upon terms, withholds each party’s bottom line, discloses material defects to both and ensures equal access to updates throughout the process.
A transaction broker owes honesty, fair dealing, skill and care, disclosure of material facts and accounting for all funds.
They can prepare, present and explain offers but cannot advocate or strategize for a better deal on your behalf.
Fees are often shared, which may reduce costs, but negotiation power shifts to the parties unless additional representation is retained.
Transaction brokers are designed to minimize conflicts by remaining neutral, but parties should review disclosures carefully and ask questions.
It varies by state. Check your state real estate commission guidelines to see if transaction brokerage is recognized or required.
Choose a single-agent if you need dedicated advocacy, or a transaction broker if you value impartiality and streamlined coordination.
Visit state real estate commission websites to download sample disclosure forms and review required language.
Consult your state’s official real estate commission site for the latest rules, forms and FAQs on transaction brokerage.
Explore additional articles on agency relationships and see our glossary for terms like dual agent, single agent and fiduciary duty.
Review your priorities, understand the scope of services, read all disclosures and choose the representation model that best supports your goals.
