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Exam vocabulary · brokerage relationship

What Is Transaction Broker in Real Estate?

Definition

A transaction broker is a licensee who helps both parties close a sale without representing either one, owing honesty, accounting and disclosure of material facts but no loyalty or advocacy. In several states it is the default relationship until agency is created in writing.

How the exam tests transaction broker

These mirror the phrasing you will see on test day. Answer them, then read the explanation whether or not you got it right.

Transaction Broker: exam questions1/8
Agency

A transaction broker, sometimes called a facilitator, is best described as someone who:

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Every transaction broker question, answered

Every question above with its correct answer and the reasoning behind it. Read the explanations for the ones you answered correctly too. A lucky guess and knowing the rule look identical on a score report. These are sample questions from our larger bank.

  1. 1. A transaction broker, sometimes called a facilitator, is best described as someone who:

    • AActs as a subagent of the listing broker
    • BRepresents both parties as their fiduciary
    • CAssists both parties without representing either as an agentcorrect
    • DRepresents the party who pays the fee

    Why: Transaction brokerage is a non-agency relationship: the licensee moves the deal along without owing fiduciary duties or advocating for a side. Calling it representation of both parties describes dual agency, which is a different animal.

    Agency

  2. 2. Which duty does a transaction broker still owe both parties?

    • AHonest dealing and disclosure of known material factscorrect
    • BConfidentiality of each party's negotiating position, enforced as a fiduciary duty
    • CUndivided loyalty
    • DObedience to instructions

    Why: Even without agency, a licensee must deal honestly, account for funds and disclose known material defects. Loyalty and obedience are the duties that disappear, because there is no principal to be loyal or obedient to.

    Agency

  3. 3. Working as a transaction broker, Halvorsen is asked by the buyer, "What should I offer to get this house?" Halvorsen may properly:

    • ASupply recent comparable sales and let the buyer decidecorrect
    • BTell the buyer what the seller has privately said she would take
    • CDecline to provide any market information at all
    • DRecommend a specific offer price and strategy

    Why: A facilitator can hand over factual market data, which serves both parties equally, but recommending a strategy is advocacy reserved for an agent. Refusing to supply public sales data would fail the duty of reasonable skill and care.

    Agency

  4. 4. The clearest difference between a disclosed dual agent and a transaction broker is that the dual agent:

    • AMay be paid by both parties
    • BOwes fiduciary duties to both partiescorrect
    • CNeed not disclose the arrangement in writing
    • DMay disclose each party's confidential information to the other

    Why: A dual agent has two clients and the fiduciary obligations that come with them, even though loyalty is limited; a transaction broker has customers and no fiduciary duties at all. Neither one may pass confidential information across the table.

    Agency

  5. 5. A transaction broker, sometimes called a facilitator, owes the parties:

    • AHonesty, accounting, reasonable skill and care, and disclosure of material factscorrect
    • BNo duties at all, because there is no agency relationship
    • CUndivided loyalty to whichever party pays the compensation
    • DThe same fiduciary duties as a single agent owes a client, except for confidentiality of information

    Why: A transaction broker owes honesty and fair dealing, accounting for money, reasonable skill and care, and disclosure of known material facts, but not loyalty or advocacy. It is wrong to say no duties are owed, since non-agency reduces the duties rather than eliminating them.

    Agency

  6. 6. A buyer working with a transaction broker asks, "What should I offer to get this house for the least money?" The transaction broker may properly:

    • ANegotiate on the buyer's behalf as an advocate for the lowest price
    • BRecommend the lowest offer likely to be accepted by that seller
    • CProvide comparable sales data and let the buyer decide the numbercorrect
    • DReveal what the seller told the listing side about needing a quick sale

    Why: Supplying objective comparable sales data is a ministerial, non-advocacy service consistent with transaction brokerage. Recommending the lowest offer likely to be accepted is advocacy, which crosses into the loyalty duties a facilitator does not owe.

    Agency

  7. 7. A licensee acting as a transaction broker discovers the buyer intends to demolish the historic home immediately after closing. The seller has not asked about the buyer's plans. The licensee should:

    • AWithdraw from the transaction to avoid a conflict
    • BRequire the buyer to disclose the plan in the contract
    • CVolunteer the demolition plan to the seller as a material fact
    • DTreat the buyer's plans as confidential and not volunteer themcorrect

    Why: A buyer's post-closing intentions are personal information rather than a material fact about the property, so a facilitator does not volunteer them. Material fact duties cover the property's physical and legal condition, which the buyer's future plans do not affect.

    Agency

  8. 8. Which statement best describes the representation a Florida transaction broker provides?

    • ANo representation at all, only clerical help with the paperwork
    • BFull fiduciary loyalty to whichever party pays the commission
    • CFiduciary representation of the seller only
    • DA limited form of representation to the buyer, the seller, or both, without fiduciary capacitycorrect

    Why: Fla. Stat. 475.278(2): a transaction broker "provides a limited form of representation to a buyer, a seller, or both" but "does not represent either in a fiduciary capacity or as a single agent." It is limited representation, not none, and it is not fiduciary.

    Agency

Where transaction broker sits in the exam vocabulary

Transaction Broker is a brokerage relationship, and so are dual agency, designated agency and subagency. That matters more than it sounds: a multiple-choice item builds its wrong answers out of siblings like these, because they are the options that look plausible to someone who has learned the category but not the distinction. If transaction broker appears as the correct answer, expect to see dual agency and designated agency on the same screen.

Transaction Broker does not stand on its own: it assumes you already know fiduciary duty. Questions that look like they are testing transaction broker are often really testing whether that idea is solid underneath it.

The exam most often tries to catch you by putting transaction broker next to dual agency and fiduciary duty. Each of those is a real concept sitting close enough to be tempting, and the question usually turns on the single feature that separates them rather than on the definition of either one. Read the contrast, not the term.

Words that mean transaction broker, but only sometimes

These are conditional synonyms. Each one is interchangeable with transaction broker in the context stated beside it and misleading everywhere else, which is precisely the kind of distinction an exam item is built on.

  • facilitator: equivalent to transaction broker in states such as Massachusetts whose licence law names the non-agent licensee a facilitator.
  • non-agent: equivalent to transaction broker in licence-law discussion contrasting the role with a client-representing agent.

Related exam terms

Tested alongside

Often confused with

Know this first

Transaction Broker belongs to the brokerage relationship family of exam concepts. When it is solid, take the free real estate exam prep or browse the full real estate exam vocabulary.