Happy September! Today I’d like to explain how “agency” works with regards to Real Estate Sales. Let’s begin with a little history. When I was licensed in the 1980’s nearly all real estate agents worked for the Seller. Yes, even the agent working with the Buyer worked for the Seller. As the public figured this out, the Florida Real Estate Commission changed the law, requiring Real Estate Agents, at the first substantive contact, to make consumers aware of the different types of brokerage relationships available to them, and this disclosure was required to be in writing and kept on file for each transaction. This went on for quite a few years; then the law changed and the part about the first substantive contact was removed. Today, all agents are presumed to be Transaction Brokers from the onset of a customer relationship.
There are two types of approved Brokerage Relationships in Florida. The first is called Single Agency and without getting too technical, Single Agency is form of fiduciary relationship, where the agent actually represents the client. Example: If the Seller’s agent hears that a Buyer is willing to pay more, they must relay that message to the Seller. A Real Estate Brokerage acting as a Single Agent can represent a Buyer or a Seller but not both in the same transaction. The other type is called a Transaction Broker Relationship. Transaction Brokers provide a limited form of non-fiduciary representation to a buyer, a seller, or both in a real estate transaction. Example: If a Buyer’s agent hears that a Seller is willing to accept less, they can’t tell the Buyer, as that would be putting one party’s interest to the detriment of another.
There’s a 3rd type of approved relationship called No Brokerage Relationship in which the agent is not looking out for either party, but of course they have to be fair and honest.
A Single Agent acts as a fiduciary for their client and is required to provide 1) Full Disclosure, 2) Obedience, 3) Loyalty, and 4) Confidentiality. Comparatively, a Transaction Broker provides a limited form of representation to a buyer, a seller, or both in a real estate transaction but does not represent either in a fiduciary capacity. Example: A few months ago, Our Single Agent’s clients, the Buyers, told her what they’d probably offer on a house they were interested in. Later, our agent was gathering more facts about the house from the Seller’s agent, and he told her the lowest price the Seller would accept. That price was considerably lower than her Buyers were thinking of offering. As a Single Agent, our agent saved her Buyers over $40,000. Had she been a Transaction Broker, she would not have been able to do that for her clients.
In Florida, all Agents are presumed to be Transaction Brokers unless a Single Agent or No Brokerage Relationship is established in writing with a customer. So…what does this mean to you? Not much - unless you want to truly be represented when you’re buying or selling real estate, yet it does imply that you may want to talk to your agent about the skills they possess and are allowed to use when it comes to representing clients.
NOTE: Most Brokerages don’t offer Single Agency as an option – Transaction Brokerage is the only option offered at most Brokerages. At CENTURY 21 Beggins, we allow our agents to act as a Single Agent unless we’re involved in both sides of the transaction, in which case, with your consent, we transition to Transaction Brokerage for that transaction.
As a provider of Life Betterment Solutions, we’re here to help. We’ve got your back! If you’re even remotely thinking of Moving Up – Moving Down - or Simply Moving Around, please feel free to reach out to the agent who sent you this newsletter. We’re happy to Empower, Educate and Encourage you to make sound decisions. We’ve got your Back. J And, we’ll represent you as a Single Agent if you ask.
More to come on this topic. Until next time, may you have fair weather and following seas!
Craig J. Beggins
President, CENTURY 21 Beggins Enterprises