UNDERSTANDING BUYER AGENCY IN COLORADO

Thinking about buying a home in the Denver area? You need to need be aware that the Seller has professional representation (aka Listing Agent) who is specifically hired to protect their best interests throughout the home selling process. As a Buyer, you need to ensure someone you trust is advocating on your behalf!

In Colorado, REALTORS or Real Estate Agents may represent a Buyer (as an Agent), the Seller (as an Agent) or the Transaction itself (while not acting as an Agent for either party). What's the difference? Think of a Buyer Agent or Seller Agent as a "COACH" and a Transaction Broker as a "REFEREE". Coaches are hired by their team to serve as the expert to game plan, strategize, advise, counsel, educate and prepare their team for the best possible outcome - whereas Referees remains neutral and aren't necessarily care who wins the game because they have no loyalty or fiduciary to either party and are forbidden from advocating for the buyer or seller. Buyers are not required by law to have representation, just like they are not required to visit the Emergency Room when they fall and split their head open. While stitches or surgery may likely be required for the best possible health outcome, they are at liberty to take matters into their own hands by wrapping their head in toilet paper & duct tape. While both options will stop the bleeding, it's obvious to most people that having an expert evaluate your situation and take appropriate action will not only save you from a more immediate issue, it also helps mitigate any future issues that may arise a week, month or years down the road. It's no different in real estate because you really never know when something can go sideways before, during or after a contract is signed.

What does hiring a Buyer's Agent do for you?
It creates a fiduciary relationship which is one based on trust because the agent owes the following duties to the client: Loyalty, Obedience, Diligence, Disclosure, Confidentiality, Accountability and Reasonable Skill & Care. A duty of loyalty is one of the most fundamental fiduciary duties owed by an agent to his client because it obligates a real estate agent to act at all times solely in the best interests of his client to the exclusion of all other interests, including the agent's own self-interest.

So how are real estate agents compensated for representation?
Many buyers have no idea that they have always been responsible for compensating their agent/Realtor. The reason they weren't are is because for many, many decades the listing agent, seller and/or homebuilder agreed to compensate the Buyer Agent brokerage firm when the agent helped a buyer successfully purchase a property. There's never been a "standard" compensation amount or % because everything has always been negotiable between parties to the contract. However, prior to August 2024, buyer agent compensation amounts were advertised in the MLS as well as on websites like Zillow, RedFin and Realtor.com. After August 2024, compensation amounts can no longer be advertised in the MLS or any website that get's its information from the MLS. Check out my page dedicated to buyer agent compensation. What do these changes mean to buyers? Not much because Colorado Real Estate Contracts were very transparent in detailing how much was to be paid and by which party (buyer, listing agent, seller, or builder). There were a few minor tweaks to a few paragraphs in the contract, but at the end of the day, buyers are still responsible for negotiating compensation with their agent and detailing the best way to get fees and commissions negotiated into the contract so they can be considered by the seller or builder.

I strongly encourage all buyers to pay close attention to the contracts because sellers, listing agents and builders offer a wide range of compensation to the buyer brokerage firm that may or may not cover all of your expenses. Do not sign anything until you fully understand what your financial obligations are because the stakes are too significant and potentially too costly - so never assume anything. Work with a trusted REALTOR like Anthony who refuses to rush you through the process because the decision you make today may very well be the largest financial transaction you'll ever make. RE/MAX Agents have been consistently voted #1 Most Trusted Agents, so you can count on Anthony to patiently and walk you through everything and answer all of your questions - especially things you never knew were important. Take comfort knowing that I'll have you back every step of the way and well after the transaction closes!

Colorado law requires agency disclosure to prospective buyers. Every real estate agent must disclose the types of agency through which they can represent you. For example, if you do not sign a Buyer Agency Agreement or a Listing Agreement (for sellers), you will NOT have an Agency relationship in place to protect you. For example, if you attend an open house and decide to write an offer on that property, you'll likely end up working with the seller's agent (aka Listing Agent)! Be very, very careful what you tell this person because they were hired by the seller to protect their interests and anything you tell them can be used or leveraged against you. Always consider your options and outcomes.

Should You Hire a REALTOR?
Everything You Need to Know About Hiring a Buyer's Agent
Buyer Broker Agreements
Buyer Agent Compensation & Disclosures
Real Estate Agent Commissions
 

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