Explaining Single Agency, Dual Agency and Transaction Broker Relationships


What is Agency?

Dual agency is outlawed in many states, including Florida, where my real estate license is held. The problem with dual agency is that pesky word agency. Agency in real estate terminology means that the sales associate (licensed agent) enters into a relationship with a client to whom he owes fiduciary duty, also known as obedience, loyalty and confidentiality. She is working on behalf of that client in all matters pertaining to a specific real estate transaction. That is the definition of agency.

In Florida, we refer to it as single agency. A simple and easy way to understand single agency is this: the agent is stepping in as understudy to take over the role of the client in one play called the transaction. During that play, the understudy/agent always acts in the best interests of the client, just like he was the client himself.


The Problem with Dual Agency

Dual agency is just what it says it is: an attempt to act in both the buyer and seller’s best interest at the same time. Can an understudy play both starring roles at the same time, that of both the buyer and the seller and act in the best interests of each at the same time? Of course not, it would be impossible to act in both the buyer and seller’s best interests at the same time. That is why dual agency is outlawed in most states.


Enter the Transaction Broker

That is not to say that an agent cannot handle the transaction for both the buyer and the seller. In Florida, we have a limited agency classification known as transaction broker. While it sounds like dual agency, it is not. In this capacity, the agent is working for the transaction, but has not entered into a fiduciary relationship with either party. That means he is a neutral party between the two. However, he owes both parties limited confidentiality. That means he is not allowed to tell the seller that the buyer will offer more or tell the buyer that the seller will take less without permission from the party in question.

There are many Florida real estate agents and brokerage firms that work strictly as transaction brokers. Firms that eschew single agency say that working as transaction brokers avoids some difficulties and confusion. The agent is not likely to forget what his role is if it is the same all the time. It also avoids possible lawsuits, which is possibly the better reason why some brokerage firms avoid it even in circumstances where the law allows it.

As you will see by the chart below, these are the differences in the two types of agency. The limited transaction broker relationship offers only limited confidentiality and no obedience or full disclosure. (See section below titled Full Disclosure for more information). Do not be overly concerned over the lack of full disclosure. The transaction broker must still disclose to a buyer “all facts known to the broker that are not readily observable by the buyer and which have the potential to materially affect the value of the property.”

Why Choose Tranaction Broker over Single Agency?

It seems a no-brainer that a client would want to have single agency representation over that of transaction broker. However, there are some good reasons why a single agent might need to transition from single agency to become a transaction broker:

  • · . The client (a buyer) wants to purchase a property that is already listed with his agent or another agent of the same brokerage firm.
  • · The client (a seller) decides to sell his property to a buyer who was introduced to his property by his listing agent or another agent of the same brokerage firm.

The law recognizes that each agent of the firm might have special knowledge and so the firm is unable to offer confidentiality to the client.

In fiduciary relationships, the client has agency with the brokerage firm which the agent works for, so two agents of the same firm cannot offer single agency, only a transaction broker arrangement.

**Remember, the agent is not allowed to tell the seller that the buyer will offer more or tell the buyer that the seller will take less without permission from the party in question.**

Differences in Agency Relationships -- Florida

(click column header to sort results)
Single Agency  
Transaction Broker  
1. Dealing honestly and fairly;
1. Dealing honestly and fairly;
2. Loyalty;
3. Confidentiality;
Limited Confidentiality
4. Obedience
5. Full disclosure;
6. Accounting for all funds;
Accounting for all funds
7. Skill, care, and diligence ;
Skill, care and diligence
8. Presenting all offers timely unless
Presenting all offers timely unless
directed otherwise in writing:
directed otherwise in writing:
9. Disclosing all known facts that
Disclosing all known facts that
materially affect the value.
materially affect the value.

Full Disclosure

The lack of "full disclosure" under the Transaction Broker relationship should not bother the client. It does not mean that the transaction broker agency can hide things from you. Again, the notice plainly says, "Disclosing all facts that materially affect the value of residential real property and are not readily observable to the buyer." What it does mean is that the agent is not under obligation to tell you everything. In a single agency relationship, if the buyer's agent (from another firm) indicates his buyer will pay more, single agency requires the seller's listing agent to inform the seller of that when he presents the buyer's offer to him. As a transaction broker, the agent is not even allowed to go there without permission, even if he has that priviledged information.

As the official Florida Association of Realtors © Transaction Broker Notice proclaims:

Limited representation means that a buyer or seller is not responsible for the acts of the licensee. Additionally, parties are giving up their rights to the undivided loyalty of the licensee. This aspect of limited representation allows a licensee to facilitate a real estate transaction by assisting both the buyer and the seller, but a licensee will not work to represent one party to the detriment of the other party when acting as a transaction broker to both parties.


To Transition or not to transition....

As mostly a buyer's agent, I like being able to give my client 100% of my attention, but there are many times when I have served my buyer or seller well as a transaction broker. In most of those cases, I had taken on a listing and one of my associates at the office found the buyer. A few times, an agent in the office had a listing that was perfect for my client. In each case, the transaction was performed to the satisfaction of both parties.

I believe that the best way to ensure that your transaction goes smoothly and for you end up as a satisfied customer is not in the agency relationship. It is by choosing a reputable firm and an experienced agent to work with initially. The agent doesn't have to have years of experience, but should have the resources available to go to, if necessary, in order to navigate you through your transaction. My goal as an agent in Tampa Bay, and that of most of the agents I know, whether a single agent or not, is for you to be totally satisfied with our services. We hope to retain you as a client for many years to come. We also hope that you are so happy you refer your friends and family as well. That is the lifeblood of a real estate agent's business.

Comments 9 comments

Jen's Solitude profile image

Jen's Solitude 4 years ago from Delaware

Thanks for the free real estate info, it was very interesting! It is heartbreaking when a transaction falls through at the last minute.

Jeff Hale 2 years ago

I just wanted to say thanks for finally adding the common-sense answer to "why" in this heading: Why Choose Tranaction Broker over Single Agency?

I must have researched for an hour and could only find that a broker can transition from a single agency to transaction broker. I'm a buyer and my agent wants me to sign an exclusive contract with them and I have never bought real estate in Florida. So, this is all new to me. They have checked the checkbox that says "BROKER RELATIONSHIP: single agent of Buyer with consent to transition into a Transaction Broker"

I naturally thought...why do I want my agent to become less loyal to me if they want to ? Pretty good question really. Anyway, thanks for explaining that my agent might end up finding a house that they are the selling agent for. However, that does raise the question; is there a form to fill out that turns them back into a single agent if I happen not to care for the property that they were the selling agent for?

Connie Smith profile image

Connie Smith 2 years ago from Tampa Bay, Florida Author

Hi Jeff. So glad I could help! There is no form to fill out because like the term reads, he becomes a broker for that transaction. If the transaction doesn't happen, he is still free to be your single agent. If the scenario that you described becomes a reality, you can always ask for an updated single agency notice upon the transaction fail if you feel unsure about your agent's status for the next transaction. I am sure your agent will be happy to accommodate you!

Robert Castillo 15 months ago

This post was seriously GREAT! Cleared up all my confusions, can't thank you enough.

Connie Smith profile image

Connie Smith 15 months ago from Tampa Bay, Florida Author

Thanks, Robert! I definitely appreciate the comment. Florida law now assumes that an agent is a transaction broker unless the agent gives a single agent notice to the client -- even when dealing with another agency. In other words -- unless you sign a single agent notice, your agent is a transaction broker. When I initially wrote the article, it was the other way around. I don't have a problem working as a single agent and often do. Either way, I treat my clients the same really in either category and give them the fiduciary care they deserve. As far as I can see, so do most of the other agents in my office as do most of the other agents I have worked with on transactions from other companies. If they are working as a single agent, they also have to give us the signed notice so we know as well.

Connie Smith profile image

Connie Smith 2 months ago from Tampa Bay, Florida Author

Occasionally when I look back at something I wrote, especially a year later, I see a mistake and I certainly did in my last comment. I don't want to take it down so I will just make my correction here. I said: "Either way, I treat my clients the same really in either category and give them the fiduciary care they deserve." That isn't really correct as we are not in a fiduciary relationship. However, I do give them the same care and diligence AS IF we were in a fiduciary relationship -- within the framework of the law -- and so do most other agents I know .

Jon Zolsky 6 weeks ago

I understand that this is an old post, but it is still excellent :) It really is.

I am a broker, always operate as transaction broker, but reading it was very useful for me, as it is perfectly articulated.

Concerned 6 weeks ago

I may be unclear hear but I tend to consider the source and what is being communicated especially with regards to "agency." I'd rather hear this discussion from an attorney who specializes in real estate and contract law. My concern is one of due diligence on the part of the realtor (agent/broker) in terms of representation. For example if I was a buyer, and asked for the pro's and cons of homeownership vs condo ownership, what would happen if I placed a contract on a condo and then could not get conventional financing because of some association issue....insufficient master policy insurance coverage, or not enough owner occupied residents or a number of possibilities outside of what otherwise I would normally qualify for financing? In the mean time a home I would have put an offer and received financing on is sold. Any difference in liability or recourse for me based on agency relationship? Would it be material fact for the agent to know that conventional financing in that particular condo was unlikely and only cash buyers need apply?

Connie Smith profile image

Connie Smith 6 weeks ago from Tampa Bay, Florida Author

I understand your concern but I'm not sure you quite understand the responsibilities of fiduciary duty. Whether the agent works as a single agent or a transaction broker in that first scenario you described, prescience is not one of the duties of a single agent.

It is the buyer's duty to discover any defects during the inspection period. There are many transactions for both houses and condos that fall apart during the inspection period (aka due diligence) and even further along on the transaction. I can only say that if the agent does the job right, that the buyer should be eligible to get their deposit back if the financing falls through, per the contract.

I just had one where the seller (Fannie Mae) didn't disclose that an oil tank was removed and helical piers placed underneath the foundation of a single family property to remove contaminated soil. They had a 156 page report that we didn't get until we were over 60 days into the transaction and only after three general contractors and an inspector had looked at the property and not said a word about it. The fourth contractor mentioned that there had been a problem so I addressed it with the seller's agent and got the report.

My buyer is moving forward. It was repaired, but what if it had not been? Also, what if the current seller didn't know about the oil tank that was placed there in 1965 that was contaminating the soil? If not, they are under no obligation to disclose that to you which they do not know any more than an agent is. If it was discovered late into your transaction and the current seller wouldn't remedy...well, there are all kinds of scenarios like this. The lender may not finance based on an issue discovered in the late stages of a contract.

I am only giving one, but in your scenario, that wouldn't likely be the fault of the agent, acting in either capacity -- unless the agent had previous knowledge that there was a problem in that community, which answers your last question.

Why would an agent withhold any information, knowing the transaction is not going to take place? Every agent I know doesn't want to work for free which is what happens when a deal falls through for whatever reason. When I am asked whether a house or condo ownership is better, I always say that is up to the individual tastes of the buyer. Both a house and a condo may fall under the most minute form of government there is -- that of a condo association or homeowner's Association. In Florida, where I am licensed, a buyer has three days after receiving the CONDO documents to change their mind and cancel the purchase. The documents include the rules of the association and the budget. I capitalized "condo" because the purchaser of a property in an HOA doesn't have that same right to cancel based on the documents. While I happen to think this is a very weak area of Florida real estate law and needs improvement, usually the budget isn't as important in an HOA. However, that also depends on the community and what the HOA fees cover. Still, the rules are be very important. Are those rules a framework that you can live by? HOAs can fine you just like condo associations can for not following the rules and get even take your property if you don't comply through foreclosure.

It is a buyer's choice to make, not the agent's. Both types of ownership have advantages and disadvantages. Weigh the options and decide. I will usually show both and they then pick which one they feel is suited to their lifestyle. If it doesn't work out, I will do my best to find something that does. Sorry if you lost out on the other place you were interested in, but you made the choice, not me... Ultimately, I do not think that an agent without specific knowledge who answers your question in either capacity would be liable no matter the agency. However, a court may decide that the agent SHOULD have had that knowledge if it is generally known. In that case, being a transaction broker doesn't relieve you of responsibility to disclose material facts so I doubt the agency relationship would make a difference to a court. At any rate, that is a legal decision that would be decided there. Also, keep in mind that your choice of lender may affect whether your choice is qualified for financing. What one lender denies, another may approve.

Lastly, most agents, including myself, are not attorneys. Anytime that you feel the need, you should consult an attorney, and so you should to get a definitive answer to your questions above. Bottom line, all my clients know that.

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