Every new year ushers in new laws that were passed in the prior year will little fanfare or notice. However, if you’re purchasing or selling real estate in South Carolina, January 1, 2017 will have a profound impact on the services available to you by some real estate agents. As of the new year, Transaction Brokerage will be in effect as an option for buyers and sellers.
What is Transaction Brokerage?
If you have ever bought or sold real estate in Florida, this will sound very familiar to you. A Transaction Broker is one that does not represent either Buyer or Seller. They represent the transaction. Transaction Brokers ARE NOT a fiduciary to either party in a transaction and they do not advocate for either customer in the transaction.
How is Transaction Brokerage different from Buyer and Seller Agency?
Transaction Brokerage is unlike Buyer and Seller Agency, where the agent represents a party in the transaction and owes that party fiduciary duties. A Transaction Broker may perform “ministerial acts” such as writing and presenting offers, arranging closings, and arranging ancillary professional services like a home inspection. Transaction Brokerage duties are outlined in advance as well as the fees they expect to receive for the completion of these duties.
Like Buyer and Seller Agency, any broker engaging in Transaction Brokerage owe the customer:
- honesty and fair dealing
- accounting for all funds
- using skill, care and diligence in the transaction
- disclosing of material facts that affect the transaction, value or condition of the real property and that are not readily ascertainable
- promptly present all written offers and counter offers
- limited confidentiality which includes:
- information on the buyer’s motivation to buy or willingness to make a higher offer than the price submitted in a written offer;
- factors motivating the seller to sell or the seller’s willingness to accept an offer less than the list price;
- that a seller or buyer will agree to financing terms other than those offered; and
- information requested by a party to remain confidential, except information required to be disclosed by law
- additional duties that are entered into by a separate agreement.
Will All Brokers Offer Transaction Brokerage?
My expectation is that Transaction Brokerage will be offered by select brokers, similar to a Limited Service Listing Agreement. You will want to inquire if your broker offers it.
Who would hire a Transaction Broker?
This is the million dollar question. My initial thought would be this is a great alternative for For Sale By Owners. In a tight market, most FSBO’s have no trouble finding a buyer to purchase their house but unless that person is represented by an agent, no one has the appropriate paperwork or knowledge of the transaction flow. Additionally, there’s nothing to say that a Buyer or Seller couldn’t upgrade brokerage services (from Transaction Broker to Exclusive Right to Sell) if their FSBO efforts weren’t working out.
Builders may also utilize a Transaction Broker since they typically pay for their own marketing.
What do you need to know?
Starting January 1, 2017, look for a revised South Carolina Agency Disclosure. Regardless of who they represent (or no one in this situation), all agency relationships (including Transaction Brokerage) MUST BE DISCLOSED.