How am I Being Represented? Exclusive Agent VS. Transaction Broker

One of the first things prospective real estate agents learn when preparing and educating themselves for the state’s real estate exam is the difference between exclusive agency and transaction brokerage. An easy way to compare the types of representation is to relate them to a football game.

Exclusive agency, where a real estate professional exclusively represents either a selling or abuying party, acts like a coach of the football team. Everything they do is in the best interest of their team and it’s their responsibility is to work on their team’s behalf and protect its best interests. That includes keeping certain information confidential as well as disclosing any adverse information that could potentially uneven the playing field.  Paraphrasing a Colorado Real Estate Commission (CREC) approved document:

An exclusive agent works solely on behalf of their client to promote their interests with utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for their client. The selling agent must disclose to potential buyers all adverse material facts actually known by the seller about the property. The buyer’s agent must disclose to potential sellers all adverse material facts known about the buyer, including the buyer’s financial ability to perform the terms of the transaction and, if a residential property, whether the buyer intends to occupy the property.

A Transaction Broker on the other hand, acts like a referee in a real estate transaction. Generally, this form of representation is used when an agent finds a buyer for a property they already have listed on the market. In other words, the buyer and the seller are like two separate teams and the agent, now a transaction broker, is there to make sure everyone understands the rules and abides by them. They can provide clarification when there are questions, but must not offer or imply how to interpret or apply the information. In other words, they can tell each party it’s fourth down and explain their options, but they are not allowed to advise on whether to punt or go for the first down.  From the same CREC form used above:

A transaction broker assists the buyer or seller or both throughout a real estate transaction by performing the terms of any written or oral agreement, fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction, without being an agent of advocate for any of the parties. A transaction broker must use reasonable skill and care in the performance of any oral or written agreement and must make the same disclosures as agents about all adverse material facts actually know by the transaction broker concerning a property or a buyer’s financial ability to perform the terms of a transaction and, if a residential property, whether the buyer intends to occupy the property.

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