Understanding Buyer Agency in Colorado - Professional Buyer Representation by Denver Colorado Realtor Anthony Rael

UNDERSTANDING BUYER AGENCY IN COLORADO

Thinking about buying a home in the Denver area? The seller will have professional representation...Will you? You see, sellers list their homes with real estate agents to assure professional representation throughout the home selling process. As a buyer, you deserve the same kind of service.

Real estate agents & REALTORS® may represent either the buyer, the seller or the transaction. Is your agent working for you? How do you know? How can you be sure that someone is looking out for your best interests? In Colorado, most listing agents, sellers and/or homebuilders compensate the buyer agent's brokerage firm that leads to successful closing. There is no "standard" compensation amount or % - everything is negotiable between parties to the contract. I encourage you to pay close attention to the contracts because sellers, listing agents and builders offer a wide range of compensation to the buyer brokerage firm. Do not sign anything until you fully understand what your financial obligations are. The stakes are too significant and potentially too costly - so never assume anything. Work with a REALTOR® who refuses to rush you through the process because its a decision you may eventually regret. Count on Anthony to be patient and walk you through everything and answer all of your questions - especially things you never knew were important. I have you back!

In the interest of transparency and full disclosure, Colorado law requires agency disclosure to prospective buyers. Every real estate agent must disclose the types of agency through which he/she can represent you. If you do not sign a buyer agency agreement, then you are NOT being represented. Don't make this mistake. Consider your options and outcomes. Here are some facts:

Duties & Obligations	Using Your Own Buyer's Agent	Using the Seller's Agent (aka Listing Agent)
Arrange Property Showings
Keep your bargaining & financial position confidential		Must inform seller of adverse conditions affecting your buying ability
Monitor transaction to closing
Assist with financing
Disclosure & information
Provide accurate information
Advise & Counsel		No!
Promote & Protect your Best Interests		No!
Exposure to both listed & Unlisted Properties		No!
Point out Reasons NOT to Buy		No!
Negotiate the Best Price & Terms		No!
Writing an Offer with your Best Interest in Mind		No!

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.

Real Estate Commissions : How Are Agents Paid?
Navigating Beyond the Headlines to Understand "How the Sausage is Made"

Now let's address the headlines and internet memes announcing "Death of 6% commissions in Real Estate". Many clients, friends and family members have reached out asking for opinions on how all of this negative media coverage will impact my business. In order to fully understand what all the headlines are about, let’s talk about "how the sausage is made". A lawsuit filed in 2019 in Missouri (aka the Sitzer-Burnett case with home sellers alleging they should not have to pay a buyer's agent commission and that the real estate industry was colluding to keep commissions high by transparently advertising in the MLS + every single real estate website in the world (zillow, redfin, realtor.com, remax, etc…) how much a buyer’s agent would be paid if they were to cooperate ("co-op") with the listing agent and seller by bringing a buyer to the closing table. This class-action lawsuit was immediately followed by copycat suits around the country with the same claim that the National Association of Realtors (NAR) and real estate brokerage firms were conspiring to set commissions at 6%, which violated the Sherman Antitrust Act of 1890. In October 2023, the case went to a jury and after only a few hours deliberating, the jury ruled in favor of the plaintiffs (home sellers). In early 2024, NAR along with several brokerage firms settled with the plaintiffs for hundred of millions of dollars and agreed to implement two new rules effective in August 2024:

1) Sellers and listing agents would be prohibited from advertising a buyer's agent co-op commission in the MLS (Multiple Listing Service) or any website that receives its data from the MLS

2) Buyer Agents are now required to have a Buyer Broker Agreement signed with a buyer that outlines compensation, duties and both party's rights and responsibilities... YES and NO...keep reading:

*Colorado has offered a Brokerage Disclosure to Buyer or Buyer Listing Contract for decades. Unlike many parts of the country, Colorado Law does NOT require buyers to a sign a agreement before touring homes. Therefore, any agent that refuses to show you a property unless you sign a document first is not being truthful and may actually be in violation of the law. Make sure you fully understand what the document says and if the agent passes it off as mandatory or something they are required to do by law, respectfully decline and understand that by signing, you may be locked you into a Buyer Broker Agreement that obligates you to work with that agent or company for a specified period of time (1-day to 1-year) AND compensation agreement detailing the amount of money (expressed as % or $) that you will be responsible for paying. Proceed with caution. If you ever feel like an agent is pressuring you to sign a document just to show a home that, I encourage you to please call the The Colorado Division of Real Estate at 303-894-2166

Here is the Colorado Real Estate Commission's Brokerage Disclosure to Buyer (effective August 14, 2024)
Colorado law does not require buyers to sign an agreement for compensation before touring a property. However, if you want a broker to represent you as a buyer agent, you will eventually need to sign an Exclusive Right to Buy Listing Contract with them. This agreement defines the relationship between you and the Agent/Realtor, establishes expectations, and protects both parties. It can also help build trust between the two parties by ensuring that your agent is looking out for
your best interests.

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

Mortgages, Loans & Investment Protection
Buyer 24-Month Investment Protection Program
Financing Options - Understanding mortgage terms and options
Monthly Mortgage & Payment Calculator
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