When hiring a real estate broker to assist them in buying or selling a house, many people naturally and unsuspectingly assume they will have the broker’s undivided loyalty, that the broker will follow their instructions, that the broker will keep their information confidential, and that the broker will disclose to them everything they know about the property, the other party to the transaction, and any other relevant information.

A little-publicized 2003 change in Florida law turned these assumptions on their head. In effect, real estate brokers became legally authorized to make sure they receive their commission, even if it means being disloyal and disobedient to the person who hired them.

Since 2003, the presumption under Florida law is that all real estate brokers and salespeople are operating as “transaction brokers.” Therefore, if you hire a Florida-licensed real estate broker or salesperson, and if the listing agreement does not specify you are engaging them as a “single agent,” then you have hired a “transaction broker.”

What is a “transaction broker?”  If you ask a real estate broker or salesperson, you will be told it means they represent “the transaction” and that their job is to “facilitate” the transaction by assisting both the buyer and the seller. In reality, a transaction broker’s loyalty is neither to the buyer nor the seller. A transaction broker’s only mission is to make sure the transaction is completed (and to get the commission), even if it means acting contrary to the instructions or the best interests of his or her customer.

In order to fully understand the nature of a transaction broker, it is instructive to examine the duties a transaction broker does not owe to his or her customer. Unlike a single agent, a transaction broker does not owe the customer a duty of loyalty. If you engage a transaction broker, you give up your right to his or her undivided loyalty.

Unlike a single agent, a transaction broker does not owe the customer a duty of confidentiality.  Unlike a single agent, a transaction broker’s duty of confidentiality is “limited,” and even that limited confidentiality can be waived by the customer.

Unlike a single agent, a transaction broker does not owe the customer a duty of obedience. Thus, a transaction broker is free to act in direct violation of instructions given by his or her customer, as long as doing so can be justified by the best interests of “the transaction.” When their commission is at stake, the ability of real estate brokers to self-justify is unparalleled.

Unlike a single agent, a transaction broker does not owe the customer a duty of full disclosure. A transaction broker is required to disclose known facts only if they materially affect the value of the property and only if they are not readily observable to the buyer. A transaction broker can withhold all other information from the customer, no matter how potentially useful or material it might be to the customer.

Does it make a difference? In a transaction with reasonable and financially-solid parties on both sides, and the competent involvement of ethical real estate, legal, lending, and title professionals, a transaction broker may be adequate. However, when problems arise in a transaction, the person who hired the broker may feel tremendously let down when he or she realizes the broker only represents “the transaction” and the broker, because all he or she cares about (and is legally required to care about) is the commission, pressures the customer to accede to unreasonable demands made by the other party, or demands that the customer agree to bear additional closing expenses, or chooses sides against the customer in favor of the other party to the transaction.

If you want the real estate broker you hire, and to whom you may be paying thousands of dollars in commission, to be obligated to be loyal only to you and to follow your instructions, and not to disclose your confidential information, make sure the listing agreement you sign contains a provision specifying you are engaging the broker as a “single agent” and not a “transaction broker.”