Agency in Colorado: What is a Transaction Broker or a Buyer’s or Seller’s Agent?

The Colorado Real Estate Commission is there for the customer, whether the buyer or seller. Before a Realtor or Real Estate Agent (different terms explained ) can help a buyer or seller, they must disclose to the customer whether they are acting as an agent (an advocate for the party and needs a signed Buyer’s Agency Agreement) or as a transaction broker (usually the default as it doesn’t require a signed agency agreement).

Before 1994, all brokers were deemed to be agents of the seller or a sub-agent of the buyer. This is based on English Common Law. I also think this is sometimes why customers think that a broker is always representing the seller as that is who traditionally pays the commissions (and could happen with dual agency which is illegal in Colorado). I know that my parents thought this way and as a result they didn’t trust the broker (or Realtor/real estate agent). See more here: Colorado Brokerage Relationships in Real Estate Act

Colorado licence law led the way for the nation in 1994 by establishing two different types of working relationships between a broker and a party: single agency and transaction brokerage (and today only a few states do this see this article).

Since then, the customer in Colorado has two choices when engaging the services of a real estate broker. One choice is “transaction-brokerage” where the broker assists one or more parties throughout the transaction in a neutral way without being an advocate for any party. The second relationship is “agency” where the broker is a single agent representing only ONE party in the transaction. Some buyers or sellers may come from states where dual agency is allowed (as I mentioned above). You will not have that choice in Colorado. That is because there is a conflict of interest when a seller’s agent decides to represent a buyer as their agent too. Please see this interesting article from Inman which brings up agency.

I prefer to work 95% of the time as a buyer’s or seller’s agent. I understand that many people are worried about signing a contract for one agent to work for them. Please be aware that you can sign for any length of time, whether for one transaction, two weeks, two months, or 6 months. It is up to you. I want to be your “coach” and your advocate. Without a buyer’s agency agreement, I act as a transaction-broker as default and am a neutral “referee”.

Please have a look at the contracts and forms on the DORA website, especially the Definitions of Working Relationships form. I will ask you to sign this form before I can show you any properties. And please let me know if you have any questions or concerns.