BENEFITS OF BUYER AGENCY

What is Buyers Agency?

As defined by the State of Colorado:

Buyers Agent: A buyers agent works solely on behalf of the buyer to promote the interests of the buyer with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the buyer. The buyers agent must disclose to potential sellers all adverse material facts actually known by the buyers agent including the buyers financial ability to perform the terms of the transaction and if a residential property, whether the buyer intends to occupy the property. A separate written buyer agency agreement is required which sets forth the duties and obligations of the broker and the buyer.

How does this benefit me as a home buyer?

In other words, upon formalizing the Buyer Agency relationship, a Colorado real estate broker, can represent and be an advocate for your interests.

How is a Buyers Agent compensated?

Buyer Agents in Colorado are traditionally compensated by the seller at closing. As such, the services rendered by the Buyers Agent are free to the home buyer.

Other types of working relationships are as follows:

Sellers Agent: A sellers agent (or listing agent) works solely on behalf of the seller to promote the interests of the seller with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the seller. The sellers agent must disclose to potential buyers all adverse material facts actually known by the seller’s agent about the property. A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller.

Transaction-Broker: A transaction-broker assists the buyer or seller or both throughout a real estate transaction by performing terms of any written or oral agreement, fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction without being an agent or advocate for any of the parties. A transaction-broker must use reasonable skill and care in the performance of any oral or written agreement, and must make the same disclosures as agents about all adverse material facts actually known by the transaction-broker concerning a property or a buyers financial ability to perform the terms of a transaction and if a residential property, whether the buyer intends to occupy the property. No written agreement is required.

Customer: A customer is a party to a real estate transaction with whom the broker has no brokerage relationship because such party has not engaged or employed the broker, either as the partys agent or as the partys transaction-broker.

What does this mean to me?

Colorado is quite progressive in their real estate regulation and laws. Colorado is in step with California, leading the pack of states actively engaged in protecting the consumer. The Colorado Real Estate Commission prepares the forms, we as brokers simply fill in the blanks. The Definitions of Working Relationships form, language above, explains the different types of relationships, hence roles that a real estate broker can work here in Colorado as established by the real estate commission and state law. As identified, there are Seller’s Agents who directly represent only the seller, Buyer’s Agents as discussed above, who only represent the buyer, and Transaction Brokers (unique to Colorado) who impartially assist both the buyer and seller. A Customer might be someone who walks into an Open House simply looking for information about the property. By default, all agents start out as Transaction Brokers, i.e. no formal agreement and neutral. Until agency is established, via a written Buyer Agency agreement, a broker can not be your advocate, negotiate on your behalf, give advice, present an offer, and as such be “officially” on your team.

The role of a Buyer Agent in Colorado is indeed a newer role. In the past, buyers working with an agent were actually working with a sub-agent of the seller. This often was informal, confusing and offered opportunity for serious conflicts of interest. Even if the buyer’s agent worked for a different company they represented the seller, not the buyer. This is still the case in some states. So who represents the Buyer’s interests? With the advent of Buyer Agency in Colorado, as identified in the Definitions of Working Relationships form, the Buyer’s Agent now truly represents the buyer, not the seller.

The Seller’s Agent strictly represents the seller during the course of the listing. There are situations where as a Seller’s Agent where we might default to a Transaction Broker relationship. Here is an example, say I am your Seller’s Agent and have listed your house. During an Open House a non-represented buyer comes in and wants to buy your house. I can either remain your Seller’s Agent and treat the buyer as a Customer or default to a Transaction Broker and complete the transaction at arms length neutrally completing the transaction. This can be hard to do, and impossible, if the seller is related to me or it’s my house. If I have no personal relationship with the seller then it’s possible and common.

A Transaction Broker may assist a buyer and/or seller with no written agreement required. However, while reasonable skill and care is required, there is no advocacy for either party. Written disclosures are required and written agreements are still recommended. Hence, this role is very neutral in position and capacity. As Joe Friday would say, “Just the facts…”. Here is an example of how these two roles work as related to the sport of football. A Coach on a team is an example of a Buyer’s or Seller’s Agent whereas an Umpire is an example of a Transaction Broker. While there are locales in Colorado where Transaction Brokers are commonly found, i.e. the mountains, here in the Denver Metro area Agency relationships are the norm. So where we as broker commonly start out as Transaction Broker’s we as brokers migrate to Buyer’s or Seller’s Agents depending on the role we are taking when we formalize the relationship with our clients.

Please contact us if you would like to professionally represented when you consider buying or selling your home.