REALTOR® vs. Real Estate Agent: Understanding the Difference and Fiduciary Duties

REALTOR® vs. Real Estate Agent:

Understanding the Difference and Fiduciary Duties

When navigating the Florida real estate market, you’ll encounter terms like “real estate agent” and “Realtor.” While often used interchangeably, there’s a significant distinction, especially when it comes to the level of client representation and specific duties. Understanding these differences, particularly regarding fiduciary duties and the roles of single agents versus transaction brokers, is key to making an informed decision.

REALTOR® vs. Real Estate Agent

• REALTOR®: A Realtor is a real estate agent (or broker) who is also a member of the National Association of REALTORS® (NAR). This membership requires adherence to a strict Code of Ethics and Standards of Practice that goes beyond state licensing laws. The term “REALTOR®” is a registered trademark and indicates a commitment to higher ethical standards and professional conduct.      
• Real Estate Agent: This is a licensed professional who has met the state’s education requirements and passed the real estate exam. They are legally authorized to assist individuals in buying, selling, or renting properties and must work under a licensed real estate broker.

Fiduciary Duties:

Single Agent vs. Transaction Broker in Florida

In Florida, the relationship you have with your real estate professional is defined by state law, primarily as either a Single Agent or a Transaction Broker. This determines the level of fiduciary duty owed to you.

Single Agent Relationship

A Single Agent represents either the buyer or the seller exclusively. This relationship carries the highest level of trust and accountability, meaning the agent owes their client full fiduciary duties.

• Fiduciary Duties (O.L.D. C.A.R.):

• Obedience: Must follow all lawful instructions from the client.
• Loyalty: Must act solely in the best interest of their client, even above their own.
• Disclosure: Must disclose all known relevant and material information that might affect the value or sale of the property.
• Confidentiality: Must safeguard the client’s private information that could harm their bargaining position.
• Accounting: Must properly account for all funds and property entrusted to them.
• Reasonable Care & Diligence: Must use their skill and expertise to protect the client’s interests.
• Advantages: You receive undivided loyalty and advocacy. Your agent is dedicated to negotiating the best possible terms exclusively for you.
• Disadvantages: An agent can only represent one side in a transaction (buyer or seller), meaning they cannot represent both parties in the same deal.

Transaction Broker Relationship

By default, in Florida, a real estate licensee is presumed to be acting as a Transaction Broker unless a Single Agent relationship is specifically agreed upon in writing. A Transaction Broker provides limited representation to a buyer, a seller, or both, but does not represent either in a fiduciary capacity.

• Duties (Limited):

• Dealing honestly and fairly.
• Accounting for all funds.
• Using skill, care, and diligence.
• Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer.
• Presenting all offers and counteroffers in a timely manner.
• Limited confidentiality (e.g., cannot disclose motivation or willingness to pay/accept more or less than offered).
• Advantages: Can facilitate a transaction between a buyer and seller in the same deal without a conflict of interest, as they remain neutral. This can streamline communication.
• Disadvantages: No dedicated advocacy. The transaction broker will not work to the detriment of one party over the other, meaning they won’t advise you to pay less or accept more if it harms the other party’s position. They do not owe loyalty or full confidentiality.

Why Choose a REALTOR®?

Regardless of the brokerage relationship, working with a REALTOR® offers an added layer of assurance. Their commitment to NAR’s Code of Ethics means they are held to higher ethical standards than licensed agents who are not members. This provides clients with greater confidence in their agent’s professionalism and ethical conduct.

Choosing the right type of representation is a critical decision in your real estate journey. Understanding these roles empowers you to select the professional relationship that best aligns with your needs and goals.

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