Agency: Who Represents Who? : "My Steamboat Connection" Real Estate Blog

"My Steamboat Connection" Real Estate Blog

Agency: Who Represents Who?

I just took a class in Colorado Real Estate Agency this past week. Colorado Agency is a little different than Texas Real Estate Agency, where I was a broker for 13 years. While I was in class it dawned on me that most of my clients are from out of state, where I am sure their agency laws are different as well. Sure would be nice and easy for the consumer if the agency laws were the same for every state, but I don't see that happening.

By law, agents must disclose which brokerage relationships are available to you. This is usually done by presenting a form that has been approved by the Real Estate Commission of that state. When you are presented with this form, please read it. Especially if you are buying property in a state that you are not familiar with. Agency is not a big deal, you just need to know who is representing who and what your choices are.

Since I am licensed and working in the State of Colorado now, I will share with you the language from the forms used in Colorado. The following are excerpt's from the form we use, titled "DEFINITIONS OF WORKING RELATIONSHIPS"-

"For the purposes of this disclosure, seller also means "landlord" (which includes sublandlord) and buyer also means "tenant" (which included subtenant)."

"Seller's Agent: A seller's agent (or listing agent) works soley on behalf of the seller to promote the interests of the seller with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the seller. The seller's agent must disclose to potential buyers all adverse material facts actually known by the seller's agent about the property. A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller."

Another way of looking at this is that the seller's agent must disclose everything they know about the property, but cannot disclose anything they know about the seller that would put the seller at a disadvantage (divorce, relocation specifics, etc).

"Buyer's Agent: A buyer's agent works soley on behalf of the buyer to promote the interests of the buyer with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the buyer. The buyer's agent must disclose to potential sellers all adverse material facts actually known by the buyer's agent including the buyer's financial ability to perform the terms of the transaction and if a residential property, whether the buyer intends to occupy the property. A separate written buyer agency agreement is required which sets forth the duties and obligations of the broker and the buyer."

"Transaction Broker: A transaction-broker assists the buyer or seller or both throughout a real estate transaction by performing terms of any written or oral agreement, fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction without being an agent or an advocate for any of the parties. A transaction-broker must use reasonable skill and care in the performance of any oral or written agreement, and must make the same disclosures as agents about all adverse material facts actually known by the transaction-broker concerning a property or a buyer's financial ability to perform the terms of a transaction and if a residential property, whether the buyer intends to occupy the property. No written agreement is required."

So, the big difference between a transaction-broker and a buyer's or seller's agent is that the transaction-broker can give you your options, or choices, but cannot give you their advice or opinion. And really, when friends and family give you their advice or opinion, do you always listen to them? Sounds like I am not big on buyer/seller's agency, but actually I am. I almost exclusively represent sellers as a seller's agents. That way I can give 100% of my attention to the marketing and promoting of their property. I have a buyer's agent in my office that I refer buyers of my listings to. Have I ever worked as a seller's agent and then worked with a buyer on my own listing? Absolutely! When I work with buyers, I work as a buyer's agent. If I had a listing and was acting as a seller's agent, and I had a buyer that I was working with as their buyer's agent, I could still sell them my listing. As a seller, I am sure you would not want me to exclude anyone. If that scenario played out, I would then become a transaction-broker for both parties, since I can't continue to represent both parties at the same time. Of course, I would have to have permission from both my seller and my buyer (all of which is explained and decided in the listing and buyer's representation contracts). The point I was making about not always taking advice from those close to you is for the very reason that you do find yourself being represented by a transaction-broker and not by a buyer's agent- that's okay. Your agent still has almost all of the same duties, they still must disclose any material defects that they know about the property and they still have to keep confidential information confidential.

"Customer: A customer is a party to a real estate transaction with whom the broker has no brokerage relationship because the party has not engaged or employed the broker, either as the party's agent or as the party's transaction-broker."

This form states very clearly in big, bold letters: "THIS IS NOT A CONTRACT." It's simply an acknowledgment and you will be asked to sign it. See, very simple. It's just important that buyers and sellers know what choices you have and that you understand them.

If you have questions on agency , Mailto: stacy@stacy-brown.com or call me at (970) 871-1157

11:56 AM - Sep. 24, 2006 - comments {2} - post comment
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re: Agency: Who Represents Who?
Excellent discussion, useful to even this NJ e-pro. Many of my customers still don't get agency until explained a 2nd time. I still miss Colorado! Brad Higginbottom, Bound Brook, NJ (USAFA '80)
Brad Higginbottom - 7:05 AM - Sep. 25, 2006

re: Agency: Who Represents Who?
Thanks, Brad! I sometimes miss New Jersey- lived there in the early 90's when I worked for Continental Airlines!
Stacy Brown - 9:49 AM - Sep. 25, 2006