|7385 W Hwy 50
Salida, CO 81201
Salida - Buena Vista - Chaffee County - Collegiate Peaks area - Arkansas Valley - San Luis Valley
Buyer agency is defined as a principal-agent relationship in which the broker is the agent
for a buyer, with fiduciary responsibilities to the buyer. What does that mean? It means
that as a buyer's agent a Realtor is tied to the buyer, and that all of his/her loyalties in the
transaction are to the buyer.
Buyer agency is a relatively new concept for the real estate world. In the past, agents
were Seller's Agents, working for the person who signed a contract employing them to sell
real estate. Over time that arrangement resulted in too many misunderstandings. A buyer
working with a Seller's Agent often regarded that person as his agent, and felt free to
make confidential statements, not understanding they would be passed on to the seller.
Complaints were made to real estate commissions, and lawsuits were filed. New laws were
adopted to protect buyers and set specific guidelines for Realtors in working with or
representing buyers. As a result, many states now require Realtors to explain agency
status to the buyer. In Colorado, a Realtor is required by law to make this disclosure at the
first significant contact. Agents in our office talk with a great number of long-distance
buyers, so that means we often disclose agency status over the phone.
In Colorado, real estate brokers work as Seller's Agents, Buyer's Agents, or Transaction
In any case, your Realtor is working to assure you legal title to the property and protection
against fraud and future problems, but only the Buyer's Agent is legally allowed to work in
the capacity of an advocate for your interest.
Remember, unless you agree to other terms (requiring a seperate form or
contract), neither Transaction-Brokerage nor Buyer's Agency bears any cost to
you. In most real estate transactions the seller pays the Realtor commissions.
As a buyer, you can work directly with the seller's agent who listed the property, but
remember that the seller's agent, or listing broker is the Realtor hired by the seller to
represent his/her interest and is therefore required by law and code of ethics to treat you
as a customer and work in the best interest of that person. This doesn't suggest that
they will take advantage of you or resort to unfair practices, but by law it requires that they
put the seller's interest above yours and treat you as a customer only. In some cases, if
all parties agree in writing, a listing broker can become a transaction broker to the seller
and the buyer. This means the broker isn't an advocate for either party and is only
facilitating the transaction. Most offices, including ours avoid this practice, but there are
instances where it applies.
The seller pays all broker's commissions in real estate transactions. If the buyer is
represented by a buyer's agent or transaction broker, the selling agent splits his/her
commission with this agent. You, the buyer, don't pay for the services of your
buyer's agent or transaction broker. (Unless you agree to other terms in writing.)
You may, however, pay in the long run if you do not have an agent, as no one is
working on your behalf to make sure you get the best deal.
How you choose is based on what level of representation you need. Examples of the
differences are below.
A Seller's Agent:
Has the duty is to obtain the best deal for the seller. Is allowed to give the buyer only
material facts about the property. The buyer is a customer.
A Buyer's Agent:
Has the duty is to obtain the best deal for the buyer. May pass on any and all known
information about the seller or the property. CAN advise and assist buyer in negotiating
and selecting terms (price, possession terms, inclusion and exclusions, remedies,
contingencies, etc., etc., etc.). CAN provide professional opinion or knowledge about the
current and future value of the property and advise buyer in financial risks and
opportunities. CAN share known information known about the seller's motivation to sell or
willingness to accept less. In other words, a Buyer's Agent can use their knowledge and
expertise to your advantage and assist you in making the best possible arrangement.
Has the duty to inform buyer of any known material defects found in or on the property.
CANNOT advise and assist buyer in negotiating and selecting terms. CANNOT provide
professional opinion or knowledge about the current and future value of the property and
advise buyer in financial risks and opportunities. CANNOT share known information
known about the seller's motivation to sell or willingness to accept less. In other words a
Transaction-Broker facilitates a transaction and ensures that all requirements of a legal
property transfer are met, but is limited by law in using their knowledge and expertise to