Transaction Broker or Agent?
In the state of Colorado where I am licensed as a real estate broker, there are two defined roles in which I can serve the public. First is that of a Transaction Broker, which essentially serves as a facilitator. The second is that of an Agent, in which I serve as a fiduciary. As a home buyer, you get to choose whether a licensed real estate broker will serve you as a Transaction Broker or an Agent.
I’ll further define each role to help you consider which option is best for you. I’ll start with the role of a Transaction Broker. By default, this is the level of service that any licensed real estate broker will provide. There are specific responsibilities that a Transaction Broker must fulfill. These are as follows:
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 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 (taken from Brokerage Disclosure to Buyer, Definitions of Working Relationships - approved by the Colorado Real Estate Commission).
In addition to the uniform duties mentioned above, there are several matters that a Transaction Broker should not disclose without your informed consent. These include not sharing that you are willing to pay more than the purchase price for a property, what your motivation is for purchasing the home, whether you will agree to financing terms other than what is offered or any material information about you unless required by law.
The other level of service is that of an Agent. While the term agent or real estate agent is often used generically, in Colorado, it is a specific and legally defined term. The role of an Agent is defined as:
A buyer’s agent works solely 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 (taken from Brokerage Disclosure to Buyer, Definitions of Working Relationships - approved by the Colorado Real Estate Commission).
An Agent must perform the duties above in addition to the uniform duties that a Transaction Broker is to fulfill. This is an extra level of service that benefits you as the home buyer. Essentially you have someone who is in your corner vs. a neutral party that can’t give you advice.
So which level of service is most beneficial to you as a buyer? The obvious answer is that of an Agent. But at what cost? The good news is that a real estate broker is typically paid at closing by the listing brokerage firm, who in turn gets paid by the seller. So when purchasing a home that is listed on the local Multiple Listing Service (MLS) there is no out of pocket cost to you. The exception would be if you are considering For Sale by Owner properties and the owner refuses to pay a commission. Most are willing to negotiate but some aren’t.
Are there times when it would serve you as a buyer to have a real estate broker act as a Transaction Broker? Potentially it can if the real estate broker is also representing the seller. An example would be if you are working with a broker that you are comfortable with and they are listing a home you want to buy, you can write the offer with them for their listing. By Colorado law, if a real estate broker is representing both the buyer and the seller, they can only represent each party as a Transaction Broker. This works only if the buyer is comfortable with the service level of a Transaction Broker. If you want or need Agency representation you should use a different broker.
In real estate transactions, as in most things, there are always nuances but in general these are the essential variables to consider. Don’t hesitate to get in touch if you have any questions!
About the author: Sean Gilliam is a real estate agent with LoKation Real Estate in Northern Colorado. Sean can be reached at sgilliam@mylokation.com or by phone at 970-313-6706. For additional content see Sean’s Youtube channel or to search for properties see his web page.
Interested in buying a home or selling your current home? I am committed to your success. Give me a call at 970-313-6706 to get started.
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