How Rules of Agency Will Impact Your Real Estate Transaction in Colorado
So what are the benefits of Buyers and Sellers each having an Agent represent them in a real estate transaction in Colorado? To answer that question you first need to understand the Rules of Agency.*
There are different types of Agency, depending on the relationship you are establishing with your Realtor. If you are selling a home there are rules the Listing Agent must abide by. These are laid out in the Seller’s Agency Agreement – a written contract that is signed by both the Seller and the Agent. Basically the Listing Agent agrees to act in the best interests of the Seller at all times. The Agent agrees to represent the Seller in the sale of the home under the understanding that her goal is to negotiate the highest price and best possible terms for the Seller.
If you’re buying a home, you can elect to work with the Listing Agent, and this is known as Dual Agency. Both the Buyer and the Seller must sign a dual agency agreement BEFORE signing any documents relating to the purchase of a home. This is because the rules change when an Agent is representing both parties. At this point, the Agent becomes something of a messenger for both parties, passing along documents without actually getting involved in the transaction. (The term “transaction broker” is often used in this context). Any information the Agent has that would affect negotiations is strictly confidential and may not be shared with either party. Both Buyer and Seller are expected to make their own decisions.
As a Buyer you can elect to work with your own agent and this is known a Buyer Agency. As with the Listing Agent, there are rules that the Buyer’s Agent must abide by and these are laid out in the Buyer’s Agency Agreement. In this case the Buyer’s Agent agrees to act in the best interests of the Buyer. The basic understanding is that the Agent will negotiate the lowest possible price with the best possible terms for the Buyer. Before looking at homes with an agent, Colorado law requres you sign a Buyers Agency agreement even if it is for one day only. If you feel comfortable with the Real Estate agent you can then change the date to a longer period of time.
As you understand more about the Rules of Agency it becomes apparent what the advantages are to each party to have their own Agent.
