AGENCY OR NON-AGENCY
Agency Status Makes a Difference
As real estate professionals, we are licensed by Colorado to represent people in the sale, purchase, or lease of real property. State statutes, codes of ethics, principles of agency law, and agency forms define our responsibilities. We strive to protect our buyers and sellers from the inherent risks in real estate transactions. All parties deserve our fair and honest treatment.
Over the years many buyers and sellers have misunderstood our role. As a result, our real estate commission and the state legislature have instituted the ways in which we may work with the public. We are required to discuss these relationships early in the buying and selling process.
When we work with a seller, we can act either as a seller’s agent or a transaction broker. When we work with a buyer, we can act either as a buyer’s agent or a transaction broker. If you have no brokerage relationship with the real estate broker, you are a customer. In that case, the broker only has to give you fair and honest treatment. Whenever you hear buyer say “but I thought my real estate agent was my friend,” it’s because that buyer had no agency relationship with that broker. My advice is to stay away from being just a customer.
A seller’s agent works solely on behalf of the seller by promoting the interests of the seller with the utmost good faith, loyalty, and fidelity. The seller’s agent negotiates on behalf of and acts as an advocate for the seller. The seller’s agent must disclose to potential buyers all adverse material facts actually known by the seller’s agent. A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller.
A buyer’s agent works solely on behalf of the buyer but is typically paid by the seller or seller’s brokerage. Yes, that’s right; a buyer’s agent can be paid by the seller even though the buyer’s agent promotes the interests of the buyer with the utmost good faith, loyalty, and fidelity. The buyer’s agent can negotiate on behalf of the buyer. The buyer’s agent must disclose all adverse material facts actually known, the buyer’s financial ability to perform the terms of the transaction, and, if it’s a residential property, whether the buyer intends to occupy the property.
A transaction broker assists the seller or buyer or both throughout a transaction. A transaction broker must use reasonable skill and care in the performance of any oral or written agreement. In addition, the transaction broker must disclose all adverse material facts actually known by the transaction broker concerning the property, a buyer’s financial ability to perform the terms of the transaction, and, if it’s a residential property, whether the buyer intends to occupy the property.
Since January 2007, it has been required to have a buyer or tenant sign Colorado Real Estate Commission Form (BD 24-10-06). With this form, the buyer or tenant can choose to be a “customer” whenever the broker and brokerage listings are based on a seller’s agent relationship. Because our larger companies have a considerable number of listings, they may have a company policy that its brokers may only enter into a transaction broker relationship with buyers and sellers.
If you have read through all this legal mumbo jumbo, you will notice that the buyer’s agent is similar to a seller’s agent and that a transaction broker is similar to both of the other relationships. However, there are significant differences.
What is the best deal for you? Only you can answer that question. Many real estate brokers only want to be transaction brokers because there is less liability. However, savvy real estate buyers and sellers may feel that the transaction broker relationship is too limiting. In my humble opinion, a buyer or seller gets a better deal by entering into a buyer’s agency or seller’s agency with your real estate broker.