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When purchasing a home in Colorado, not many buyers realize there are three different relationships you can have with the real estate broker. In each relationship, the broker performs generally the same functions of helping you find your next home and then guiding you through the purchase process, but each relationship defines what responsibilities the broker has to you- the buyer.
For instance, what if your agent also represents the sellers of the house you’d like to make an offer on; or what if the seller’s agent works in the very same office as your agent? What if you want to buy a newly built home? How are your interests protected?
Therefore, it is important for you to understand what you can expect from each type of relationship before talking with a broker.
Buyer’s Agent
This is the relationship most people think of when using a real estate agent to purchase a home, but in Colorado this type of relationship is bound by a legal agreement for both the agent and buyer. An Exclusive Right To Buy Contract describes exactly what responsibilities the agent has in representing you, the buyer.
The Buyer’s Agent works “solely on behalf of the buyer to promote the interests of the buyer with the utmost good faith, loyalty, and fidelity.” In other words, after signing this contract, your real estate agent becomes your coach, looking out for your best interests, negotiating with the sellers on your behalf, and advising you through the whole process. Your agent is completely Team Buyer.
Be aware, however, because it’s a legally binding document, it is important to read it completely, ask your agent questions, and even consult a lawyer if necessary.
This loyalty and fidelity exists if your agent works in the same office as the seller’s agent, but not if your agent is selling the home you want to buy. If that happens, your agent becomes a:
Transaction Broker
A Transaction Broker is the relationship that forms if your agent also represents the sellers of the house you’d like to buy, but it can also exist if the policy of a brokerage company states all agents must be Transactions Brokers, or when no agreement contract is signed.
While an Exclusive Right to Buy contract requires your agent to be the coach for Team Buyer, a Transaction Broker is more of a referee. A Transaction Broker must disclose important information the buyer should have, as required by law. They are required to be honest and truthful, but can not negotiate on your behalf or advise you in making any decisions concerning the property.
Essentially, they act as a neutral party overseeing the purchase process between the buyer and seller- like a referee overseeing a game and enforcing the rules.
Customer
What kind of relationship exists, though, when you fall in love with a model home in a new construction community? If you decide to make an offer on one of those homes without your own real estate broker, you are considered a Customer. The agent you speak with in the showing office represents the interests of the builder only. In this situation, you have the same rights when purchasing a home as you do when purchasing a car. You can, and probably should, consider having a Buyer’s Agent with you when purchasing a new home to protect your best interests in the process.
Basically, a Customer relationship exists at any time you have not agreed to employ an agent. Another good example is when touring an Open House. When you speak to an agent at an Open House, you are a Customer. Therefore, while the agent present would be happy to discuss your home buying goals, it is important not to discuss your personal financial information or details until you define what type of relationship you can have with that agent.
Would you like more information on how an agent represents you when purchasing a home? I would be happy to email you a copy of the Colorado Definitions of Working Relationships Disclosure so you can be prepared before talking to an agent. Email me at pennyfahey@windermere.com, or contact me on my Facebook page: Penny’s House to Home.
