What is a transaction broker?

A transaction broker is a neutral party that helps facilitate a real estate transaction between a buyer and a seller. Technically, transaction brokers don’t represent either party and must treat both the buyer and seller equally.

Hiring a transaction broker can help both parties save money during a sale, but it also eliminates the chance for you to have a real estate professional — like an agent or broker — advocate for your best interests. 

What does a transaction broker do?

A transaction broker is a third-party that a buyer or seller can hire to help guide them through a real estate transaction.

The transaction broker helps with: 

• Coordinating sale details
• Preparing an offer on behalf of the buyer
• Determining a competitive list price for the seller
• Facilitating better communication between the buyer and the seller
• Writing the sales contract
• Coordinating the transaction from the time of the seller accepting the offer to closing

A transaction broker essentially serves as a mediator between the buyer and seller. This is not the same thing as a dual agent, which is a real estate agent that represents both parties. 

A transaction broker is also different from a real estate transaction coordinator, who assists agents with any administrative tasks that come along with buying or selling a house — like creating listings on the MLS and communicating updates to clients. 

It’s worth noting that transaction brokerages are not legal in every state, like Texas, but it’s fairly common in some states, like Florida or Colorado, which were the first states to allow for them.

How transaction brokers differ from real estate agents

The concept of translation brokers can be confusing, because at first glance the role they take on looks very similar to that of a real estate agent and they often tackle similar responsibilities. 

Even though a transaction broker can handle the same duties as a real estate agent, the main difference is the lack of specific representation. The transaction broker doesn’t represent the buyer or the seller specifically; they represent both parties involved in the sale equally. This is why they act more as a facilitator. 

When a homeowner hires a seller’s agent, that real estate agent is there to not only help facilitate the sale, but to look after their best interests. On the flip side, prospective homebuyers hire a buyer’s agent who represents them in the sale.

Whether you are selling or buying, when you hire a real estate agent, their job is to try to ensure you get the best deal possible, whereas a transaction broker focuses more on the logistics that come with buying and selling a house so the experience goes smoothly for both parties. 

How are transaction brokers paid?

One of the main benefits of hiring a transaction broker is their pay structure. Both the buyer and the seller will pay the transaction broker a fee, whereas real estate agents are paid a commission by the seller. The agents are paid a percentage of the home’s sale price, which is often much more than a transaction broker charges.

Hiring a transaction broker can help save a lot of money for the seller, but it also requires finding a buyer who isn’t working with a real estate agent and who is also willing to work with a transaction broker. 

Read more about who pays real estate commission

Pros and cons of hiring a transaction broker

There are unique advantages and disadvantages associated with using a transaction broker to help facilitate a real estate transaction. Whether you’re the buyer or the seller, you should consider both the pros and cons carefully before agreeing to use a transaction broker instead of a Realtor.

Pros

• Lower cost: Sellers can save a lot of money by using a transaction broker instead of an agent and pass those savings onto the buyer by setting a lower listing price for the sale of their house. 
• Fixed price: Sellers know exactly how much they will pay the transaction broker ahead of their home sale.
• Less legal responsibility for buyers: Typically, buyers are legally responsible for the actions of their real estate agent, but they aren’t responsible for the actions of transaction brokers. 

Cons

• Lack of legal recourse: Because transaction brokers don’t have a fiduciary responsibility to their clients, they may not be held legally responsible if something goes amiss during the transaction. 
• No negotiation help: Transaction brokers don’t help with negotiations or act as an advocate for either party, which is a valuable service you get when you hire a real estate agent. 
• Neutral assistance: There’s something to be said about having a real estate professional on your team who is only looking out for your best interests as a buyer or a seller. 

Both the buyer and the seller will need to feel that a transaction broker is the right fit in order to move forward. It’s much more common for family members to hire a transaction broker — like when a parent sells a family home to a child — because they aren’t worried about negotiations and can save money on an easy sale.