Buyer Agency Explanation
Listing Brokers and Offices
While you are searching for your next home, do NOT contact the listing office or agent for any home that you find that may interest you!
The listing broker is required by law, and their contracts with the sellers, to represent their seller’s best interests, not yours. Their job is to get the most money they can for the property, up to the full list price!
Buyer Brokers – Us!
Please contact us if you have any questions about buying a home in Denver or elsewhere in Colorado. Definitely call me first when you see a property that interests you. That way we can provide you with information on recent comparable sales and represent your best interests. In most cases we can even determine what the current owner paid for the property and when. We can help you purchase the home at the best possible price and terms and negotiate on your behalf…all at no cost to you! Does that sound like something you’d like? Read on –>
Background of Buyer Agency
In the past, all real estate agents used to represent only the seller, even the agent that was working with the buyer. This created serious and obvious conflicts of interest, and generally was not good for the buyer! After all, if the agents represent the seller, how would the buyer be able to negotiate the best possible price, or any repairs that may need to be made to the property? These issues and conflicts of interest continue to exist in situations where a buyer is negotiating with a “By Owner” seller, or starts working with a seller’s listing agent as a result of calling them from the yard sign, newspaper ad or other advertising. However, these days, it has become the norm for the seller and buyer to have their own exclusive agents, contracted to represent each party’s best interests. There are now several clearly defined agency relationships, which allow the consumer to choose the one that is best for their situation and needs.
The Buyer’s Agent’s Role
A real estate buyer’s agent represents the buyer who is purchasing property in a real estate transaction. A specific and legally binding “buyer agency” relationship exists. The buyer’s representative works for, and owes fiduciary responsibilities to, the real estate buyer, and has buyer’s best interests in mind throughout the process. In Colorado, the specific legal duties and obligations of buyer agency are defined in required standard agency disclosures and optional agreements as specified and provided by the Colorado Real Estate Commission (CREC). Please download the CREC Agency Disclosure document below to see the various agency relationships available in Colorado.
How a Buyer’s Agent is Compensated
In most real estate transactions, the seller’s commission paid to their broker is split or shared with the buyer’s agent as specified by the seller, so there is usually no cost to the buyer for the services of their agent. However, this is not always the case!
How the buyer’s agent is compensated can be negotiated between the buyer and the agent. For example, when we represent a buyer who also has a home to sell, we negotiate a significantly reduced listing rate for the current home, contingent on the client working with us on both of the transactions. We also make sure that any offer on a new home is contingent on successful sale and closing on the previous home. Therefore, it is very important that the buyer discuss the real estate agent’s compensation and specific services to be provided in the initial interview. It is highly recommended that the buyer and the agent agree to the exact terms of compensation prior to viewing properties, and sign a written agreement based on the negotiated terms. The written agreement should also spell out the responsibilities of both parties throughout the process. The State of Colorado provides a standard agreement that all real estate licensees are required to use for this purpose. Specific duties and activities above and beyond those specified by the Colorado Real Estate Commission standard agency disclosures and agreement are also negotiable, and may affect compensation terms, as well as the responsibilities of the parties.
Consult your licensed real estate broker (me) for complete details when you are ready begin the purchase process!