I’m selling my home, and the potential buyers also want to use my real estate professional to represent them. Is that allowed?
Yes, that’s allowed. The situation you’re referring to is called “transaction brokerage.” Transaction brokerage is a service option when your real estate professional represents a buyer client interested in purchasing the property in which you are the seller client. The reverse is also true—transaction brokerage is a service option when you’re interested in buying a property and the property’s seller is also represented by your real estate professional.
When a real estate professional works on behalf of only one client in a transaction they have legal responsibilities, which include:
- undivided loyalty to their client
- acting in their client’s best interest at all times
- the duty to avoid conflicts of interest
- the duty to disclose conflicts of interest when they arrive
Transaction brokerage changes the services and the legal responsibilities that a real estate professional provides to you and to the other party in the transaction. In this arrangement, they cannot fulfill their legal responsibilities because there is a conflict between the best interests of the buyer and those of the seller. The buyer wants to pay as little as possible for the property, while the seller wants to sell their property for the highest possible price. It is impossible for a real estate professional to advocate for and represent the best interests of a buyer client AND seller client in the same transaction.
This is when and why transaction brokerage becomes an option. In transaction brokerage, the real estate professional will provide facilitation services to you and the other party. These services include:
- helping the buyer and seller negotiate an agreement
- giving the buyer and seller property statistics and information, including comparative information from listing services and local databases
- providing and preparing agreements of purchase and sale, and other relevant documents according to the buyer and seller’s instructions
During transaction brokerage, the agent has to treat both parties in an even-handed, objective, and impartial manner. They must remain neutral, not advocate for either you or the buyer, and they cannot provide confidential advice.
Before a real estate professional proceeds with transaction brokerage, both the buyer and the seller need to provide their informed consent by signing an Agreement to Represent both Buyer and Seller. Informed consent means each client understands the facts, implications, and future consequences of providing their consent. You do not have to consent to transaction brokerage. If you don’t consent to it, or the other party doesn’t, there are other options available to you such as seeking representation from a different real estate professional.
