Buying a Home in Colorado : Buyer Broker Agreements; Buyer Agent Compensation & Disclosure; Real Estate Agent Commissions - RE/MAX Colorado Agent & Realtor Anthony Rael

For those of you who think all a buyer's agent sets up a home search in the MLS, chases down lockbox codes, drives around town opening doors, writes a contract then sits back and collects a fat check at closing a few weeks later, I feel bad that's the impression you have based on a previous experience or what you've read online. As mentioned above, some agents are really terrible at their job (lazy) or the transaction went so smoothly, they made it seem effortless. Maybe it was a combination of both, but I hope you stick around to learn more. There's a lot of information below, so please don't get overwhelmed by any of it because we can meet up for coffee or a beer and talk through all of it in bite sized pieces. Knowledge is Power!

So how are real estate agents compensated for representation?
Many Buyers don't realize they've always been responsible for compensating their agent/Realtor, but for many, many decades the listing agent, seller and/or homebuilder offered to compensate the Buyer Agent's brokerage firm when the buyer's agent helped a buyer successfully write a contract that resulted in the eventual purchase of a property. The amount or % of the commissions (now referred to as "compensation") has always been negotiable between buyer and agent as well. However, prior to August 2024, buyer agent compensation was advertised in the MLS as well as on websites like Zillow, RedFin and Realtor.com. Now compensation can no longer be advertised in the MLS or any website that get's its information from the MLS. Fortunately, the Colorado Real Estate Contracts were very transparent in detailing how much was to be paid and by which party (buyer, listing agent, seller, or builder). In late 2024, the Buyer & Seller contracts were revised to emphasize transparency and encourage brokers to take a deeper dive into explaining how we are paid. Moving forward, buyers and their agents will continue negotiating compensation and detailing negotiating strategies that will be reflected in purchase contracts just as they were before - except with revised language.

Buyers must pay close attention to the contracts because sellers, listing agents and builders offer a wide range of compensation to the buyer brokerage firm that may or may not cover all of your expenses. Do not sign anything until you fully understand what your financial obligations are because the stakes are too significant and potentially too costly. Work with a trusted REALTOR like Anthony who refuses to rush you through the process because the decision you make today may very well be the largest financial transaction you'll ever make. RE/MAX Agents have been consistently voted #1 Most Trusted Agents, so you can count on Anthony to patiently and walk you through everything and answer all of your questions - especially things you never knew were important. Take comfort knowing that I'll have you back every step of the way and well after the transaction closes!

Consumer Guide : Why am I being asked to sign a a Written Buyer Agreement?

Open Houses & Written Buyer Broker Agreements a Consumer Guide by National Association of Realtors

Can you attend open houses without an agent or do I need a written buyer agreement in order to tour the home?
YES and NO. If you are simply visiting an open house on your own or asking a real estate professional at an open house about the home or their services, you do not need to sign a written buyer agreement with them so you should never be pressured to do so! An agreement is only necessary when you decide you to work with a broker. It also spells out the length of the agreement and compensation due to them. One word of caution...if you attend an open house and speak to the listing agent or call the listing agent on the yard sign, it's critical for you to understand this agent must disclose their relationship with the sellers because if you decide to write an offer on this property, you will NOT have an Agency relationship in place to protect your interests. Be very, very careful what you tell this person because they were hired to protect the seller's best interests and anything you tell them can be used or leveraged against you. If you ever feel any pressure, please take a step back because it's a decision you may regret when it's too late.

Is an agent who is hosting an open house required to enter into written agreements with the potential buyers who attend the open house?
NO. In this case, since the agent is only there at the direction of the listing broker or seller, the agent is not required to have a written agreement with the buyers touring the home. Open Houses are very popular for agents to generate new business from buyers like you who may innocently tour the home and are pressured to sign an agreement. No ethical real estate agent should ever pressure you to sign anything. If they tell you it's required, walk away because this is simply not true. Take a step back and call the The Colorado Division of Real Estate at 303-894-2166 to report this individual otherwise it's a decision you may regret later.

Learn more about Open Houses & Buyer Broker Agreements

*Colorado has offered a Brokerage Disclosure to Buyer or Buyer Listing Contract for decades. Unlike many parts of the country, Colorado Law does NOT require buyers to a sign a agreement before touring homes. Therefore, any agent that refuses to show you a property unless you sign a document first is not being truthful and may actually be in violation of the law. Make sure you fully understand what the document says and if the agent passes it off as mandatory or something they are required to do by law, respectfully decline and understand that by signing, you may be locked you into a Buyer Broker Agreement that obligates you to work with that agent or company for a specified period of time (1-day to 1-year) AND compensation agreement detailing the amount of money (expressed as % or $) that you will be responsible for paying. Proceed with caution. If you ever feel like an agent is pressuring you to sign a document just to show a home that, I encourage you to please call the The Colorado Division of Real Estate at 303-894-2166

Here is the Colorado Real Estate Commission's Brokerage Disclosure to Buyer (effective August 14, 2024)
Colorado law does not require buyers to sign an agreement for compensation before touring a property. However, if you want a broker to represent you as a buyer agent, you will eventually need to sign an Exclusive Right to Buy Listing Contract with them. This agreement defines the relationship between you and the Agent/Realtor, establishes expectations, and protects both parties. It can also help build trust between the two parties by ensuring that your agent is looking out for
your best interests.

What if I Don't Want to Pay a Real Estate Buyer Broker/Agent?
Buyers have always been free to fly solo and hope for the best. There are those who believe "I'll just cut out the Buyer Agent and contact the listing agent directly to save a commission." As long as you understand that the listing agent represents the seller's best interests (NOT YOURS) and they are forbidden from helping you negotiate against their seller. You may or may not save money navigating this deal on your own. So when things come up that require advise or counseling, the seller's agent is unable to counsel you. The same is true when showing up to a new home community where the sales rep in the trailer or show home draws up the paperwork on a builder-written purchase contract that protects the builder. It's a legal binding contract and you cannot change anything. If you try to bring in a real estate agent after the fact, it will be too late because the builder will refuse to compensate them on your behalf once the contract is executed. Competent representation and advocacy is essential and like you, real estate agents don't work for FREE. Remember, while compensation is no longer displayed on the internet, you can still hire a Buyer Agent (just as you did before) and simply put their negotiation skills to the test whether the seller or builder will pay them on your behalf just like they previously did before all of the recent changes. In the case where the seller refuses, be prepared to find another property and seller who will. Otherwise, proceed with caution and have a great real estate attorney on speed dial.

There's absolutely no requirement to be represented in a real estate transaction. Just like they're not required to visit the Emergency Room when they fall and split their head open. While stitches or surgery may likely be required for the best possible health outcome, this individual is free to take matters into their own hands and wrap their head in toilet paper & duct tape if that's what saving money means to them. While both options will stop the bleeding, it's obvious to most people that having an expert evaluate your situation and take appropriate action will not only save you from a more immediate issue, it also helps mitigate any future issues that may arise a week, month or years down the road. It's no different in real estate because you really never know when something can go sideways before, during or after a contract is signed.

Selling Real Estate is Easy
If you've ever had a real estate transaction that seemed "easy" - thank your REALTOR! That means they did everything possible to ensure a smooth transaction and insulated you from 100 things that may have been going sideways behind the scenes. You see, we protect you from the drama and nonsense that sometimes takes place between parties (including agents) because let's face it, buyers, sellers & agents can sometimes allow their egos and emotions to interfere with things. They dig their heels in on the dumbest things that would otherwise completely blow up a real estate transaction and it's completely avoidable. That's why I often refer to myself as a firefighter because just like our local heroes, we're busy using our respective expertise mitigating life-changing disasters and we don't get caught up in the nonsensical things that would otherwise interfere with us doing our jobs. Surely everyone knows there’s A LOT more than just dousing a structure with water to extinguish the flames, but regardless of whether the buyer or homeowner understands "how the sausage is made" or not - we take pride knowing what it took to ensure the best possible outcome.

In the age of Google and recent emergence of artificial intelligence (AI), many would-be buyers and sellers question how complicated real estate really is. Truth is, I can train any monkey to set up client searches in the MLS or drive around town opening doors (which is what many people thing that's all we do), but do you really know "how the sausage is made"? If you believe you can successfully navigate Title companies, Home Inspection companies, Lenders, Appraisers, HOAs/CC&Rs, Non-warrantable units, Metro Districts, Local municipality rules & regulations, Solar Leases, Water & Mineral Rights, Insurance companies, Structural Engineers plus dealing with inspection-related issues? Do you have expertise in assessing property values and negotiating the right price and terms? Do you have knowledge to effectively execute a Listing Contract or Contract to Buy & Sell? By simply checking the wrong box (or failing to) and/or using legal clauses in the additional provisions section that can mitigate any potential ambiguities which may otherwise cost you tens of thousands of dollars (or more) in a future lawsuit? If the answer is yes, then by all means you are probably skilled enough to pursue this journey unrepresented. But if you're not 100% certain about what it takes to avoid future litigation, then you might want to consider hiring a trusted (full-time) real estate professional. If not me, chose someone who comes highly recommended by family or friends and/or has a stellar reputation on realtor.com.

I realize this is a massive amount of info to digest, so please bookmark this page and refer to it to remind yourself that real estate agents are not paid a penny until they can successfully demonstrate their value and get you to the closing table. We are self-employed small business owners who don't earn a salary; receive no benefits; no 401k plan; no medical, dental or vision insurance; no vacation days or PTO; no reimbursement for vehicles, mileage, repairs or insurance. Nada. Additionally, we pay our respective brokerage firms 10-40% of everything we make (it comes right off the top). Real estate is a performance-based career, so if we cannot get you to the finish line, we do not get paid - even after months of work in many cases.

Having said all of that, you (as buyer or seller) are empowered to determine if the person you are considering hiring to represent your interests brings value to this massive financial and sometimes life-changing decision. I encourage you to talk about everything from your service expectations to compensation and remember, no question should be off-limits! If your agent cannot expertly and effectively communicate their value and they quickly pivot the conversation to discounting their commission, respectfully walk away. After all, if the agent doesn't have confidence in their own expertise and the backbone to fight for their livelihood, why on earth would you trust them to fight for yours?

Learn more about the National Association of Realtors Settlement Resources?

If honesty, integrity and an agent's reputation are important factors to you when deciding to purchase a home - Anthony Rael is the real estate agent for you. As a professional buyer's agent, I am knowledgeable about local market conditions and will help you find the right house, negotiate sales terms and price and more importantly, look out for your best interests every step of the way. I have extensive knowledge of the purchase process and my responsiveness to your needs will be first-class. My real estate services are backed by a 100% satisfaction guarantee!

My personal belief is that everyone deserves Nordstrom-level service...it's just the way I've always conducted my business. When your friends & relatives need honest, responsive and professional real estate advice - please have them call Anthony Rael at (303) 520-3179. Rest assured, I will do everything humanly possible to ensure a stress-free transaction. Your friends & family will appreciate the referral .

Anthony Rael, RE/MAX Alliance offers professional & trustworthy real estate services to buyers & sellers throughout the Denver metro area including Arvada, Aurora, Brighton, Broomfield, Denver, Golden, Highlands Ranch, Lakewood, Littleton, Louisville, Longmont, Thornton, Westminster, Wheat Ridge, Adams County, Denver County & Jefferson County Colorado. Find out why Denver is rated one of the Best Places to Live! I offer homebuyers & sellers a 100% Performance Guarantee that will exceed your expectations and set a new standard of service excellence.

Anthony is a Certified Negotiation Expert (CNE) so rest-assured, he will advocate aggressively and effectively to protect your best interests and ensure we negotiate the best price and terms as possible. Leverage my life-long knowledge of the Denver Metro area - from homes, condos, lofts or investment properties, new homes builders, schools & local amenities to reliable & trustworthy business partners like mortgage brokers & home contractors to maximize your investment, secure your future and realize the home of your dreams.

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Buying a Home in the Denver Metro Area : Buyer Broker Agreements; Buyer Agent Compensation & Disclosure; Real Estate Agent Commissions - RE/MAX Colorado Agent & Realtor Anthony Rael