In Colorado, a real estate agent can have two types of relationships with buyers or sellers. They can either be a transaction broker, or they can be an agent that represents one specific party in a real estate transaction. The two roles have some key differences, and it is important that you, as the buyer or seller, know who you’re dealing with to ensure a smooth transaction. This blog breaks down the key differences and demonstrates why seeking out an attorney may still be in your best interests when buying or selling real estate.   

What is a Transaction Broker?

Transaction Brokers are unique to a few states, including Colorado, and therefore may not be as familiar to you as other agent roles. Don’t worry, we’re here to help clarify it for you! In Colorado, a transaction broker is an individual who assists one or more parties through a real estate transaction by providing advice, negotiating, and communicating. Their ultimate goal is to facilitate your sale or purchase and act as an information guide for the parties to the transaction. 

It is very important to know that transaction brokers do not specifically represent you or the other party, they just serve an advisory role. A transaction broker is neutral and cannot advise you or any other party to a transaction about whether you are getting a good or bad deal, tell you what to do, or reveal confidential information.

What makes an agent different from a transaction broker then?

If transaction brokers serve to advise you during the buying or selling process, then you may ask what agents can do for you. It simply comes down to agents acting as your representation during a real estate transaction. Whereas transaction brokers are neutral parties, agents usually represent one specific party in the transaction. If you are an agent’s client, the agent will advocate, direct, and negotiate on your behalf, and will advise you of any potential risks involved with a transaction. 

Can a transaction broker also be my agent?

Yes, a transaction broker can be your agent, but you’re going to need to get it in writing. Colorado law requires any broker to form a written agreement with a client when they want to create an agency relationship. Until a written agreement is made, a broker is not an agent. Therefore, the ONLY way to get a broker as your agent in Colorado is to enter into a written agreement. Do not go into the transaction thinking a broker automatically represents you because this is when misunderstandings happen, and mistakes are made! 

As with any other contract, it is essential to contact a lawyer before signing anything. Here at GLO, we can review any written agreements between yourself and a transaction broker to ensure that a proper agency relationship is being created and that you are being treated fairly.

Why may I need a lawyer when buying or selling real estate?  Can’t the agent or transaction broker handle everything?

The simple answer is that you should always consider adding an attorney to your team when buying or selling real estate. While agents can help you choose the type of home you want, find you a good location, and negotiate price, they are not attorneys, and they cannot provide any type of legal advice. The same goes for transaction brokers, whose primary role is to facilitate the transaction process in a neutral capacity.

There are some limited exceptions for agents outlined under Colorado law, the primary one being that it limits agent authority to interpreting and completing state-approved forms for buyers and sellers, including listing agreements, purchase contracts, and disclosures. Those very forms advise buyers and sellers to seek legal counsel before signing, though! For example, a purchase contract in Colorado comes with the headline “This form has important legal consequences” and suggests that the parties should consult legal counsel before signing.

Think about it – buying or selling a home is a huge deal, with lots of contracts and money going back and forth between parties. Having an attorney to help guide you through the process and to help you understand the legal ramifications of your transaction is essential to ensure that you are staying within the confines of the law, while also making smart decisions for yourself and your family!

If you have any questions about transaction brokers or agents, or if you need legal guidance through the real estate transaction process, GLO can help provide the assistance you need. Fill out an interest form today to see if GLO can help you.

GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients only through specific fee arrangements and signed engagement letters. GLO does not guarantee any results.