In Colorado we have two good choices of legal real estate representation. What will best satisfy your needs when you buy or sell your home?
1. Buyer or Seller Agency
When you’re buying or selling a home, you can hire a broker who represents you exclusively. This exclusive representation is called agency. An agent legally must put your best interests before anyone else’s – this is her fiduciary duty. An agent will act as a coach, advising the client to help the client succeed. In Colorado, agents can not represent both buyer and seller in the same transaction, as it is assumed that one person cannot put both the buyer’s and seller’s best interests first simultaneously.
Normally the seller pays a commission to the seller’s agent, and the seller’s agent pays a portion of the commission to the buyer’s agent. These percentages are established before the house goes on the market.
2. Transaction Broker
When you purchase a Colorado home, you can choose to have the broker represent you not as an agent but as a transaction broker. A transaction broker works not as your coach, but more as a referee in the transaction. He will not advise you on the best course of action. Instead, a transaction broker tell you what needs to be done by when, and you will make all the decisions about how to best pursue your goals without a broker’s advice.
Because transaction brokers are not giving advice on pricing, negotiating or strategy, they are legally able to represent both the buyer and the seller simultaneously. They are refereeing instead of coaching, so they are not compromising fiduciary responsibility by representing both.
BEFORE YOU BUY OR SELL:
Before you get started working with a broker, think through what the best type of representation would be for you.