Of course, each party may have another broker acting as their agent.īecause the consumer may assume agency when working with a real estate broker, and because transaction brokerage does not require a written agreement, Colorado law requires that the broker reveal in writing to a prospective buyer or seller at the outset what relationship that broker may have with the party, the duties of that relationship, and the fact a written contract is required for agency. While a broker may act as a TB for both the buyer and seller, a broker can never be the agent for both of them in the same transaction. If a broker is the agent for one party, the other party is the broker’s “customer” with whom the broker has no relationship and, hence, no obligation, other than to treat the customer fairly and honestly. The only way a broker may act as the agent of a buyer or seller is by way of a written agreement. The default broker/client relationship in Colorado is TB. Accordingly, a TB may not advise one or the other party about whether they are getting a good or bad deal, tell them what they should or should not do, or reveal confidential information. A TB, on the other hand, is neutral and makes calls consistent with the rules not favoring one side or the other. In real estate terms, an agent can tell the client if a property is over-priced or a good deal, if it’s a risky or sound investment, and the broker may reveal confidential information the broker has learned about the other party that could be used to the client’s advantage.
Transaction broker vs sellers agent how to#
Like a coach, an agent can tell his or her client what they should do and how to best win the game. As defined in the Colorado Real Estate Manual, a TB “means 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 interests of any party to such transaction.”īy analogy, an agent is like a coach whereas a TB is like a referee. An agent represents only one party to the transaction by advocating, directing, negotiating on the client’s behalf and advising the client as to the benefits and risks of a proposed transaction.Ī “transaction broker (TB),” on the other hand, assists in and facilitates the transaction. Those duties entail the highest level of trust, loyalty, and fidelity, requiring the broker to place the client’s interests above any other party and the broker’s own interests. Let’s start with the term “agent.” Agency is derived from Common Law which defines agency and dictates an agent’s duties to the principal, i.e., the client. If one or the other relationship exists, the buyer or seller is the broker’s “client.” Transaction brokerage is unique to Colorado and a handful of other states, which is why many consumers, or even real estate brokers in other states, do not understand it. There are 2 types of working relationships a Colorado real estate broker can have when working with a buyer or seller, either as an agent or a transaction broker. However, not all brokers are “agents” despite the fact most consumers or laypersons generically refer to them as such. Is your real estate broker your agent or a transaction broker, or are you just a customer? Say what?! Let me explain.įirst, in Colorado, the term “broker” is used for all persons licensed by the State of Colorado to engage in real estate brokerage activities and services, whether they be sole proprietors, employing brokers, managers, supervisors, team members, or associates.
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