Brokerage Relationships

In Colorado, all licensed real estate agents are known as brokers.  A broker can represent a party to a purchase transaction in one of three ways:

1. Seller Agent - A broker who is engaged by and represents the seller.
2. Buyer Agent - A broker who is engaged by and represents the buyer.
3. Transaction Broker - A broker who assists one or more parties throughout a contemplated real estate transaction with communication, interposition, advisement, negotiation, contract terms, and the closing of such real estate transaction without being an agent or advocate for the interest of any party to such transaction.   

A Buyer Agent is required to represent the buyer's best interests by finding the right property for the buyer under the terms most favorable to the buyer. 

A transaction broker represents neither the buyer or the seller.  This is a brokerage relationship buyers should avoid.  If your Realtor attempts to establish this relationship with you, be wary.  Ask questions, make sure you understand, and protect yourself because a Transaction Broker won't protect you.

Disclosure

Upon first substantive contact with a buyer client, the broker is required to disclose the definitions of these brokerage relationships with clients.  The Colorado Real Estate Commission has provided a form for this.  In addition, any broker intending to establish a single agency relationship with a buyer shall enter into a written agency agreement with the client which discloses the duties and responsibilities of the agent.  This agreement is called the Exclusive Right To Buy Contract and is also provided as a standard form by the CREC.  Exclusive Buyer Agents understand that full disclosure to their clients is a critical agency duty.

Agency Duty

A buyer agent engaged by a buyer must perform specific duties and obligations.  The Agent's Fiduciary Duties are defined in common law.  The Colorado Real Estate Commission has also defined a specific set of duties and obligations in Chapter 12 of the Real Estate Manual.

Legal Consequences

Most of the standard forms adopted by the Colorado Real Estate Commission include this statement: "THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING." 
Colorado licensed real estate agents are not attorneys, but under certain conditions they have been granted a limited right to practice law.   One of those conditions states that they must recommend the use of attorneys by their clients in real estate transactions.  The standard forms include this statement to assist the agents in meeting this requirement.  It is good advice.

Terminology

Real Estate jargon can be misleading.  Mortgagor/mortgagee, joint tenants/tenants in common, single agent/dual agent, agent/broker, appraiser/inspector.  Take a look at the glossary published by the Colorado Real Estate Commission.