Is Your Real Estate "Agent" Really Your Agent?

The function of the Colorado Real Estate Commission is to protect the general public in real estate transactions. One of the most important requirements of a licensed broker is to disclose to a client how the licensee is working on behalf of the client. The term “agent” is used for a licensee who is an advocate for the best interests of the client. This type of “agency” relationship requires a written contract between the client and the licensee. On the other hand, a “transaction broker” requires no written contract and the licensee merely helps facilitate a real estate transaction between a buyer and seller, without advocating the best interests of either party. So is your real estate “agent” really your agent?

It’s important to understand the basic difference of how your real estate licensee can work for you in Colorado. In some states such as California, dual agency exists so a real estate broker can be an advocate for both a buyer and a seller. Dual agency is illegal in Colorado, meaning that if a licensee is an “agent” for one side of the transaction he or she cannot be an “agent” for the other side of the transaction. A licensee working with both a buyer and a seller must generally operate as a “transaction broker” and must remain neutral to both parties.

One way to think of the broker-client relationship is to imagine yourself playing a soccer game, basketball game, or any competition that involves your coach and a referee. Think of the game as a real estate transaction. Your “agent” or coach is there to guide you, encourage you, motivate you, instruct you, and advocate your level of play to help you do your best in the game, hopefully resulting in an outcome or final score that you deserve. The “transaction broker” or referee is there to make sure both parties or teams are playing by the rules, protecting each party from illegal activities, and remaining neutral to the final score but making sure that game was played correctly. A real estate licensee can be either a coach for one team or a referee for both teams, but he or she cannot be a coach for both teams.

The term “real estate agent” has been used so much in common language that the word “agent” almost becomes synonymous with licensed broker or licensee, but keep in mind that just because you are working with a licensee does not necessarily mean you are working with an “agent.” Most importantly, you should ask yourself how you would want your licensed broker to work for you!

For more information about agency relationships or real estate in Colorado, contact Richard Jensen with Coldwell Banker Residential Brokerage at (970) 818-6161 or Richard@NoCoLifestyle.com. Clipper Way Listing