Real Estate Agency Roles Explained in Sports Terminology
When James and I first moved to the US, we got straight into looking at the property market here in Denver.
As ‘ex-pats’ one of the most confusing things to us was the concept of “Buyers Agent” and “Sellers Agent”. In Australia, we do it a little differently, like most things in the land Down Under!
Now as a REALTOR® and licensed agent here in Colorado, I thought I would break down the different brokerage relationships, what they mean and why they’re important. If you’ve never purchased or sold a property, this will come in handy.
It’s important to note that these roles differ across state lines, so this covers Colorado specifically.
In Colorado we have:
Seller’s Agents
Buyer’s Agents
Transaction Brokers
Customers
Sellers Agent
A Seller’s Agent (or listing agent) works solely on behalf of the seller to promote their interests in the sale of the property. The Agent negotiates on behalf of and acts as an advocate (or cheerleader/coach) for the Seller.
A written agreement called an Exclusive Right-To-Sell Listing Contract outlines the duties and obligations of the broker and the seller, and includes details of the property, the timeframe of the agreement, compensation etc.
The contract is between the Seller and the Agent.
Note: not to be confused with a Contract to Buy and Sell Real Estate - the contract used to transact the sale of the a property between a Seller and a Buyer.
““Think of the Seller’s Agent as a coach for the seller. They’re on your team and want you (the seller) to win”
Buyer’s Agent
A Buyer’s Agent works solely on behalf of the buyer to promote the interests of the buyer. The Buyer’s Agent negotiates on behalf of and acts as an advocate/cheerleader for their client.
A written agreement is needed to formalize the contract. This is called an Exclusive Right-to-Buy Listing Contract. It’s signed by both the Agent and the Buyer and sets out the the duties and obligations of the broker and the buyer, including a time period, payment etc
The contract is between the Buyer and the Agent.
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.
““Think of the Buyer’s Agent as a coach for the buyer. They’re on your team and want you (the buyer) to win!”
Transaction-Broker
A transaction-broker helps the buyer or seller, or both throughout a real estate transaction by performing terms of any written or oral agreement. The transaction broker should keep all the parties fully informed, present all offers and assist with any contracts, including the closing. All of this should be done without being an advocate/coach/cheerleader for any of the parties.
No written agreement is required.
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.
“Think of a Transaction Broker as an impartial referee between the parties (buyer and seller) of a transaction.”
Switching roles mid play
Switching from a Buyers or Sellers Agent to a Transaction Broker part way through your contract is completely legit, but I personally think it’s a tricky tightrope to walk as an agent.
This switch can happen (only with prior agreement between the agent and their client). An example of when this could happen is if the Buyer (represented by an Agent) was interested in a property and the Seller of the property didn’t have an agent and wanted the Buyer’s Agent to represent them in the deal.
Sound confusing? Well remember how we talked about the fact that an Agency Agreement means your Agent has to act and rep you like a coach (cheer you on, strategize, go for thew win). And a Transaction Broker is more like an impartial referee (not one any one person’s side).
Once the switch is made (from Agent to Transaction Broker), the Agent must ‘forget’ all of the insider team secrets, tactics and knowledge (aka price, terms and motivations) and take on an impartial role representing both the buyer and seller!
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.
Agency Responsibilities
When there is an “agency agreement” (Agent agreement with buyer or seller) in place, the Agent is bound by certain fiduciary duties.
This basically means they owe their client OLDCAR. Obedience, Loyalty, Disclosure, Confidentiality, Accounting and Reasonable Skill and Care.
In a nutshell, the Agent should never disclose their client’s price, terms or motivation for wanting to sell or buy to anyone.
Disclosure requirements
An Agent should fully disclose their brokerage relationship to a consumer (buyer or seller) at the first substantive opportunity and before the broker receives any confidential information.
An example of this might be when a buyer walks into an open home, the Agent (if they represent the Seller) should disclose that they are the Agent for the property.
contracts & FORMS*
Here’s a quick recap of all the contracts and forms mentioned in this article.
Exclusive Right-to-Sell Listing Contract - agency agreement between Seller and Agent
Exclusive Right-to-Buy Listing Contract - agency agreement between Buyer and Agent
Exclusive Right to Buy and Sell Real Estate (residential) - contract between Buyer and Seller for transfer of property.
Definitions of Working Relationships - a form that describes the brokerage relationships.
*forms updated as of Jan 2019