Single-Party versus Transaction Brokers
February 24th, 2011 § 3 Comments
Single-Party vs. Transaction Brokers. There’s a difference. It matters.
Brokers who are working for sellers (Listing Brokers) are working to get the highest price they can. Brokers who are working for buyers (Selling Brokers — I know, it doesn’t make sense, does it? just go with it) are working to get the lowest price. Stating the obvious: ONE PERSON CAN’T DO TWO CONTRADICTORY THINGS.
So the State of Oklahoma decided that there should be two ways to work with clients: working for the benefit of only one party, and working solely to get the transaction completed. Single Party Brokers work (surprise!) for a single party, and Transaction Brokers work to close the deal and don’t advise or advocate for any party.
To see the Single-Party Broker Disclosure (Revised 11-2009), click here.
To see the Transaction Broker Disclosure (also 11-2009), click here.
SuperRealtor, a Single-Party Broker, says: HERE I come to save the DAY*! *your day only. No one else's day will I save. Offer valid only in participating locations.
Here’s what normally happens: Mr. & Mrs. Seller list with me; I work for them as a Single-Party Broker by advising and advocating for them, helping them price, prepare, and present their home for the market in the best possible way. We put it on the market and another agent sells it. I remain a Single-Party Broker throughout the process, advising them as we negotiate the offer and move from having a signed contract to closing the deal.
If, however, I sell Mr. & Mrs. Seller’s place during an open house or from a sign call to a client who isn’t already working with a Realtor, I will (if it’s okay with everyone, which it usually is) change my status to a Transaction Broker because I cannot get Mr. & Mrs. Seller the highest price for their home and Ms. Buyer the lowest price simultaneously. So what I’m working for is getting the deal done, rather than the specific benefit of a single party. This is usually A-OK with the buyer and the seller because, hey, the whole reason they called me in the first place was to sell/buy a place. Make sense?
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ZenRealtor, a Transaction Broker, enjoys the peace that flows from having a single goal: Close. Close. Close. Close ...
Single Party Brokers:
- Are honest with all parties
- Write up, receive, and present all offers and counter-offers
- Give their clients estimates of what their closing costs will be
- Keep their clients informed about the progress of the transaction
- Account for the earnest money their clients pay or receive
- Keep their client’s information confidential
- Work for their client’s benefit (as far as the law allows)
- Disclose everything they know about the house in question
- Obey their client’s specific directions, as far as the law and the contract allows
- Let their client know that the client may be vicariously liable for the Broker’s actions
- Obey the Oklahoma Real Estate Code and the law
- Keep confidential information confidential
Transaction Brokers:
- Are honest with all parties
- Write up, receive, and present all offers and counter-offers
- Give their clients estimates of what their closing costs will be
Keep their clients informed about the progress of the transaction- Account for the earnest money their clients pay or receive
- Keep their client’s information confidential
Work for their client’s benefit (as far as the law allows)- Disclose everything they know about the house in question
Obey their client’s specific directions, as far as the law and the contract allowsLet their client know that the client may be vicariously liable for the Broker’s actions- Obey the Oklahoma Real Estate Code and the law
- Keep confidential information confidential
The most important aspect of this thing is one that most agents don’t address: If your agent is acting on your behalf as a Single-Party Broker, you can be vicariously liable for their actions and omissions. So choose your agent wisely, eh? And don’t ask us to do anything illegal.
Does that make sense? If you have any questions, just ask!
What does all this have to do with a property manger renting your property?
Good question, Pat. The Broker Relationships Act covers all real estate transactions, including leasing property, so property managers are COVERED, but there aren’t a lot of examples specific to property management in the Act itself. I’m not a lawyer (unfortunately, from my father’s point of view), so this is my opinion but not legal advice. If you have a written agreement with your property manager, they can work for you either as a single-party broker or as a transaction broker, just as though you were hiring them to buy or sell.
Some real estate agents, including property managers, also work with renters; if you want your property manager NOT to work for renters of your property as a single-party broker, then on your Single-Party Broker Disclosure you need to specify that you do not give the property manager your advance consent to change to a transaction broker while representing you. Also, single-party brokers are required to obey the directions of the party they’re representing. Since so much of what a property manager does is in the owner’s absence, some investors may feel more comfortable handing over the reins if they can give specific directions to their property manager instead of leaving it all to the manager’s standard policies.
On the other hand, some investors may feel that the biggest reason for hiring a property manager in the first place is to minimize headaches, and the possibility of being held vicariously liable for the mistakes of their property manager is a headache they have no interest in. They won’t want to spend time thinking up new ways of doing what the property managers are already doing well, so they don’t feel the need to give a lot of specific directions regarding their rentals. Since the lease listing price is already set in the Listing Agreement, it’s not like a sale where the agent is presenting offers and counteroffers, and negotiating on their party’s behalf, so the need for advocacy, advice, and representation is less for a rental owner than it is for a seller.
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