Real estate brokers are similar to attorneys to the extent that they are governed by public licensing regulations and fairly strict oversight. In the case of a seller’s agent, a principal-agent relationship is implied by traditional contract and agency law. Both a broker and a selling agent, in working on behalf of the seller, owe a duty of good faith, fair dealing, and loyalty to the seller. They must always be working in the seller’s best interest and must place the seller’s interest above their own interest.
The foregoing is better for the buyer for liability purposes. There is, however, an exception of a middleman broker, often referred to as a transactional broker. Such brokers can act for both parties without owing a fiduciary duty to either. This broker functions only as an intermediary that brings the parties together, but has no discretion to negotiate terms or perform other services. Some of the essential functions of a real estate broker include: assistance in pricing and showing the home, shepherding the process, preparing seller’s disclosures about the real estate, screening buyers, and properly handling funds.
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