Radical Realtor Promoting Equality at the Table Through Transaction Brokerage
Transaction Brokerage is a choice on the Massachusetts consumer disclosure form that every buyer/seller must sign prior to listing or buying a home with a real estate agent. The consumer can choose the role that the real estate agent is going to play for their transaction. Roles include both "agency" and " transaction" brokerage in the Berkshires.
Some states in our region have also adopted or are actively considering adopting designated agency, limited agency, and broker agency. As a practicing licensed broker in Massachusetts, Vermont and New York I have had to adapt myself and my practice to differences in all three states. For the purposes of this column I will primarily focus on real estate practices within Massachusetts and Berkshire County specifically.
Massachusetts currently recognizes the roles of agents and transaction brokers. The consumer, buyer or seller, may be represented by an agent. By simple definition, an agent is a licensee that is required under law to follow the specific legal instructions of his or her principal, the buyer or the seller. As a “fiduciary” the duties required of an agent are remembered by the acronym “OLD CAR”. These include obedience, loyalty, disclosure, confidentiality, accounting (of funds) and reasonable care. The seller/buyer is placed in a vicarious liability position when choosing "agency" as the form of representation they desire in their transaction.
A transaction broker’s or facilitator’s duties differ little from those of "agency." By law the "transaction" broker still has to provide disclosure, accounting and reasonable care and he or she may provide confidentiality. Our firm requires that our agents practice confidentiality as a matter of course.
The differences are most easily understood by thinking of "agency" being similar to the role of an attorney who is duty bound to follow the instructions of their client. Agency requires that no other interests are taken into account. The transaction brokerage role is comparable to that of mediator who must do his or her best to take the interests, needs, concerns of both parties into account, however different they may be, in order to assist the in completing the desired transaction.
An agent has one goal in mind; seek the best outcome possible for their client. A transaction broker seeks to find the middle ground by promoting the end goal of a equitable transaction closure. In an agent role there must be bias by nature of the role. In the transaction brokerage role mediation of all parties goals and objectives are considered.
Which approach works best or is the right one depends in large measure on all those involved. Harsch
Associates practices transaction brokerage in most instances. We have promoted transaction brokerage as the most equitable and efficient manner of bringing a good outcome for all parties at the closing table. Praise from our clients indicates that transaction brokerage works to reduce the time of property on the market and reduce tensions between buyer and seller.
If a buyer walks into an office which serves their seller clients as through agency that buyer can be at a disadvantage. The buyer may leave and find another licensee who will represent only the buyers interests. Buyers who are unrepresented working with a seller’s agent are quite liable to be paying more than they might otherwise. We suggest that any buyer ask or at the very least be aware that the agent may have only the interest of the seller in mind.
More to follow on the roles, liabilities and benefits of the real estate agent's role in your transaction. Next we will discuss designated agency as compared to transaction brokerage.
Paul A. Harsch, Broker