The term 'Real Estate Broker' is included in the Real Estate edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
A Real Estate Broker refers to a middle man intermediary individual who acts as the go- between with buyers and sellers of real property. They attempt to match up buyers who want to purchase a property with sellers who wish to sell. The English Common Law of Agency referred this position into existence in the United States. The broker is involved in a fiduciary relationship of sacred trust with the clients in this capacity. These brokers commonly work in exchange for a commission when they successfully match up the seller and the buyer in a closing transaction or sale. Sometimes the commissions are split up with various other involved agents or real estate brokers.
In the United Kingdom, such a professional is known as an estate agent. This business entity or individual is engaged in the enterprise of selling real estate for their selling clients. Every country’s estate agents and brokers have varying powers, responsibilities, and liabilities which naturally differ by jurisdiction.
The United States’ market gives specific names to the different types of real estate brokers and their varying sales forces. Those who are engaged on the sell side will be known as listing agents or listing brokers. Their overarching goal is to sell or lease the property at the largest price they can arrange under the best possible terms.
Those other agents or real estate brokers who concentrate their efforts on working for tenants and buyers would be buying agents. The licensing arrangements in the U.S. permit the agents to work on either side (or even both sides) in a given transaction. It is merely a personal business decision for the agent which side they will choose to focus their efforts on ultimately.
Each state handles the licensing of real estate brokers within the United States. This means that every state maintains its own licensing rules and regulations which are governed by state law and actually define out the various relationships which might occur between real estate license holders and their clients. These also specifically cover the various obligations of the realtors to their clients. Naturally the rules will be significantly different from one state to the next. This includes such areas as agency relationships, mandatory documentation on any closing transaction, disclosures, inspections, and continuing education.
Those real estate brokers which elect to work as buyer’s agents will help the buyers in their best interest in obtaining the desired property at the best, most advantageous possible price with the best potential terms available. The broker himself has a fiduciary obligation to the client in this case. They must guarantee that they will negotiate in good faith on the very best interest of their client and not for the seller. This involves keeping the prospective buyer up to speed on any and all additional information which might help them to make the best possible decision regarding the property or properties in question.
In those cases where the broker works on behalf of both the property seller and interested buyer, this interesting conflict of interest type scenario is called a dual agency. When such brokers insinuate that they will assist the buyer to get the best possibly priced deal, this becomes a case of undisclosed dual agency. This is considered to be both unethical in all cases and illegal in every state.
This is why with dual agency transactions, the broker must make full disclosure to the two parties in the transaction which of them he actually represents as broker. The client is due all appropriate fiduciary duties. This includes confidentiality, care, obedience, loyalty, disclosure, and fair accounting. In order to keep the license to sell real estate, the broker must deliver both honest and fair dealing in these difficult scenarios. He or she is required by law to request that the two parties in the transaction sign the dual agency agreement with him.