Under the new real estate statute that becomes effective January 2017, a brokerage may offer transaction agency. So what is transaction agency?
The new statute defines a transaction broker as “a real estate brokerage firm that provides customer service to a buyer, a seller, or both in a real estate transaction. A transaction broker may be a single agent of a party in a transaction giving the other party customer service. A transaction broker also may facilitate a transaction without representing either party.” For example, a licensee may work with an unrepresented party to help facilitate their transaction. The licensee can provide form contracts, disclosure forms, service provider and vendor information. The agent can also help do ministerial acts. This arrangement would most likely occur where a “For Sale By Owner” seller does not want representation but needs help completing the transaction so they seek to hire a licensee for certain tasks such as inspections. The party is not looking for client services rather they need information and forms. Transaction agency is a departure from the general rule that has held that a licensee cannot get paid unless the licensee represents at least one party in a client capacity. Now the licensee is permitted to charge a fee to the consumer for providing what is essentially customer services.
In order to establish transaction agency your brokerage must allow transaction agency. A licensee may not provide any form of agency that is not specifically allowed by your brokerage. Since not all brokerages will offer this agency please check your office manual or discuss transaction agency with your Broker-in-Charge. Secondly, if you provide transaction agency you are required to complete a compensation agreement that is signed by the parties. At a minimum the written agreement must set forth the amount of compensation and identify the party responsible for payment. The firm’s position is the agreement should also clearly set forth the scope of representation as well as all limitations.
Transaction agency does come with significant risk. We suggest using extreme caution in providing transaction agency. Under transaction agency you may not provide any client services. This includes providing advice, counsel or advocating for the consumer. You should also avoid any negotiation of the terms of the contract or repair addendum as this would be considered client services. Remember it is very hard to have a working relationship with a consumer without accidentally providing such client services.
Secondly, you may become inundated with requests from family and friends who want you to “help” on their transactions but do not want to enter into agency with you partly because they do not want to pay you a commission. Use extreme caution when you provide this agency to your friends or family members and make sure to get the proper paperwork signed. Failure to get paperwork signed could lead to trouble, particularly if your broker does not offer this form of representation or a claim is filed with LLR because if a claim is filed with LLR the investigator will want to see the brokerage’s policy on transaction agency as well as your written agreement with the consumer.
Historical Fact: Old State Road, which runs in front of Brookland-Cayce High School, was one of the oldest and most traveled routes in the development of the South Carolina back country. The route was originally an old Indian trail which became a trading path. In 1747 the trail became a public road and ran from Charleston to Granby. Eventually the road would run from Charleston to the mountains.
Photo by Consumerist Dot Com