I hope everyone had a nice Thanksgiving Day yesterday! I did. We ate, were disappointed to see the Dallas Cowboys lose to the New Orleans Saints, and Skyped with our children. Holidays aside, I have been studying like crazy. There is so much to learn. Not only does Colorado want real estate people to learn everything at the broker level, but the Real Estate Commission also wants to go to great lengths to protect the public. They want the people to understand what's going on.
Today I'd like to talk about the different relationships someone (who could be an individual, more than one person, a partnership, and a company) can have with a Colorado real estate broker. I'd also like to give you a link to the "Consumer Corner" of Colorado's Division of Real Estate. They have lots of good information for people interested in buying or selling a house.
Now, in plain words I'll tell you the three basic ways I can have a working relationship with you, and then I'll tell you my obligations to you based on that relationship. The first type of relationship is as a customer. If I meet you and I don't know your name, or I meet you when I am working as an agent for someone else, you are a customer to me. We do not have any written agreement.
The next type of relationship is as an agent. I could be a seller's agent or a buyer's agent, but we have a written contract and I have obligated myself to "represent you" or work FOR you. You are my client or principal, or whatever the legal jargon is, and I may not necessarily get paid by you, but I will work on your behalf.
The third type is as a transaction broker. There may or may not be a written contract and the relationship is in-between a customer and a client. If there is no written contract and I am working with you in some way, Colorado considers the transaction-broker relationship as the default way that we are working together.
You don't get any special designation if you are in a transaction brokerage relationship with me or any Colorado real estate broker, although maybe the law will eventually come up with a name besides "party." However, I have more obligations to you when you are a party than when you are a customer.
Although it may seem obvious, in any of these relationships, I want you to know that I do not have any obligation to do anything illegal.
Now, to help you choose, I'd like to spell out some of the obligations I have to you. I have the fewest obligations to a customer and the most obligations to a client. However, I do have responsibilities to customers.
When I am a Colorado real estate broker, and you are a customer, I owe to you all the obligations owed under state and federal consumer protection laws. I owe you:
(1) Honest and fair dealings—For example, this means that if we are trying to work a deal together, I must tell you if I am an agent for someone else in the same deal, so that you don't tell me information that I can use FOR my client.
(2) Reasonable care and skill in performance—For example, if you give me a "good faith deposit," I must be very careful to deposit it into an appropriate trust or escrow account.
(3) Disclosure of all material facts about the property that I know or that I should have known—For example, if the property has a house built before 1978 and there is a possibility of lead-based paint, I need to tell you about that possibility as well as give you federal information.
When I am a Colorado real estate broker, and we are in a transaction broker relationship, I still owe you the same obligations I owe to a customer. The examples may be different, but I still need to treat you ethically and responsibly. In addition to those obligations, I owe you:
(1) Performance of the terms we set in the written agreement—For example, I will present all offers to you and help you fill out any Colorado Real Estate Commission approved forms.
(2) Neutrality and confidentiality—I may be working with another person as a transaction broker in the same purchase, so I need to advocate for neither and neutrally help both parties. I also need to not disclose to either party confidential information about the other party. What you tell me, stays with me and what the other person tells me, stays with me. However, in following "disclosure of all material facts," including information about the seller’s property, I must disclose a buyer's financial ability to complete the transaction and whether the buyer intends to live in the residential property.
(3) Assistance with closing—For example, I will help organize a list of deadlines so that obligations can get done before the closing.
When I am a Colorado real estate broker, and I am an agent for the seller or the buyer, I still owe the same obligations as to a customer. I also owe you all the obligations in a transaction brokerage, except for neutrality. I go beyond neutrality and I work FOR you. I work hard to fulfill the terms of our contract. I advocate for you, which means I encourage and protect your interests with maximum loyalty and faithfulness. My focus becomes figuring out the best way to solve any issues and presenting that information to you. I spend lots of time and effort trying to accomplish the goal of the contract. I also want to give you any knowledge, experience, and advice that will help you along the way.
The best reason to have an agency relationship - to be my client - is to have an ally during a very complicated process that involves a lot of your money. An advocate is someone who stands beside you and fights for you. I would also want to make sure that you understand everything as things happen. I absolutely hate buying or selling houses when I'm surprised about what's happening. I really want to know BEFORE it happens. By the way, something interesting about Colorado real estate law is that I can be a buyer's agent and get paid by the seller, so it may not cost the buyer any extra to have my help.
In case you want more information about Colorado real estate working relationships, you can also look at Chapter 14 of the 2009 Colorado Real Estate Manual.
