When a buyer is working with a real estate agent in Colorado there are two ways in which to work, as a Buyers Agent or as a Transaction Broker. It may seem to make sense to a buyer that if they are working with a Realtor that they are “their agent” and will automatically be working on their behalf. This ins’t true. In order to have a true agent a buyer must take that next step sign a buyers agent agreement. If there is no written agreement you still have someone working with you but not necessarily for you. In this post I will outline the differences between the two relationships.
Working With A Buyers Agent
- You can liken working with a buyers agent as working with a coach who has your best interests in mind. Think fiduciary, advocate or agency.
- Working with a Realtor as a buyers agent requires a written contract. This contract set’s forth loyalty and compensation. Loyalty is the promise of the buyer to work with just one agent, and depending upon how the contract is completed the buyer may be guaranteeing a commission to their agent upon completion of a purchase. See the note on compensation below.
- A buyers agent works as a fiduciary to their client. They owe duties of care including: obedience, accountability, loyalty (including confidentiality) and disclosure.
- In addition to the uniform duties owed to all clients (see the list under the “Transaction Broker” section, a real estate agent working as a buyers agent is obligated to:
- Promote the interests of their client with the utmost good faith, loyalty and fidelity.
- Seek a price or lease rate and terms that are acceptable to their client.
- Counsel their client as to any material benefits or risks of a transaction.
Working With A Transaction Broker
- You can liken working with a buyers agent as working with a referee who helps you through a transaction.
- In Colorado, unless there is a buyers agency contract signed, it is presumed that a Realtor is working as a transaction broker. There is no written contract needed.
- A transaction broker assists one or more parties through a real estate transaction with communication, interposition, negotiation, advisement, contract terms and help at the closing table, all without being an agent or an advocate.
- The uniform duties due to all parties a real estate agent comes into contact with are:
- Perform the terms of any written or oral agreement with Seller
- Present all offers to and from Seller in a timely manner regardless of whether the property is subject to a contract for sale
- Disclose to Seller adverse material facts actually known by Broker
- Advise Seller regarding the transaction and advise Seller to obtain expert advice as to material matters about which Broker knows but the specifics of which are beyond the expertise of the Broker
- Account in a timely manner for all money and property received
- Keep Seller fully informed regarding the transaction
- Broker must not disclose the following information without the informed consent of Seller:
- – That Seller is willing to accept less than the asking price for the property
- – What the motivating factors are for Seller to sell the property
- – That Seller will agree to financing terms other than those offered
- – Any material information about Seller unless disclosure is required by law or failure to disclose such information would constitute fraud or dishonest dealing, or
- – Any facts or suspicions regarding circumstances that could psychologically impact or stigmatize the property.
- Seller consents to Broker’s disclosure of Seller’s confidential information to the supervising broker or designee for the purpose of proper supervision, provided such supervising broker or designee does not further disclose such information without consent of Seller, or use such information to the detriment of Seller
- Brokerage firm may have agreements with other Sellers to market and sell their property
- Broker may show alternative properties not owned by Seller to other prospective buyers and list competing properties for sale
- Broker is not obligated to seek additional offers to purchase the property while the property is subject to a contract for sale
- Broker has no duty to conduct an independent inspection of the property for the benefit of a buyer and has no duty to independently verify the accuracy or completeness of statements made by Seller or independent inspectors. Broker has no duty to conduct an independent investigation of a buyer’s financial condition or to verify the accuracy or completeness of any statement made by a buyer
- Seller is not liable for Broker’s acts or omissions that have not been approved, directed, or ratified by Seller
- When asked, Broker (will or will not) disclose to prospective buyers and cooperating brokers the existence of offers on the property and whether the offers were obtained by Broker, a Broker within Brokerage firm or by another broker.
In the vast majority of cases the compensation due a real estate agent are not affected by whether they are working as a Transaction Broker or as a Buyers Agent. When an agent shows a property that is listed through the MLS there is an offer of compensation from the listing broker to agent working with the buyer. This co-op commission is not a fixed amount and there is a space for compensation amount offered to both a Transaction Broker or a Buyers Agent, however in most cases the offer is the same. So as long as this amount is acceptable to the agent or is otherwise in agreement with the minimum amount specified in the Buyers Agency agreement the compensation to the agent isn’t an issue for the buyer.