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Who's Who in a Real Estate Transaction



Buying and selling real estate of any kind involves many people with different roles. It can get confusing! Below are the people who buyers and sellers will interact with most frequently in a real estate transaction.


Buyer's Agent

A Buyer's agent works on behalf of buyer's to negotiate and advocate on behalf of their buyer clients. This agent's duties include: working with buyers to determine what the buyers are looking for in a property, assisting in the arrangement of financing pre-approvals, helping buyers with financing options, present available homes to their buyers, schedule showings and attend showings with their buyer, write and negotiate offers and counteroffers, assisting in the arrangement of inspections and help buyers in the closing process.


A buyer's agent is sometimes called a selling agent after the contract is signed. A selling agent is an agent that brought the buyer and the buyer purchased the home, so the agent has sold the home.


A written buyer agency agreement is required which will sets forth the agent's and buyer's duties and obligations.


Exclusive Right-to-Buy Contracts

A buyer will sign an exclusive right-to-buy contract with an agent that gives the agent's brokerage firm the exclusive right to conduct all negotiations, meaning any offers and communications you have received from other agents, sellers and other sources must be referred to your agent. The agent must remain the main point of contact so that he/she is able to fulfill their duties effectively according to the contract. A buyer must disclose any other current and past contracts that the buyer has so as to avoid any conflicts of interest with the exclusive right-to-buy contract and for transparency. Once the exclusive-right-to-sell contract is signed by buyer and agent, the agent must exercise reasonable skill and care in performing the following duties: performing according to the full terms in the exclusive right-to-buy contract. present all offers to seller on the buyer's behalf, disclose any adverse material facts actually known by the broker, advise the buyer to get expert advice when the broker knows that it is beyond his/her expertise, account for any all money received and keep the buyer fully informed about the progress of the transaction.


Listing Agent

A listing agent will prepare and list a property for sale and oversee the entire cycle of the selling process. These agents duties include: researching comps to price a property, assisting with scheduling for home appraisals/inspections, developing a listing strategy and creating marketing materials, arranging for professional photographs and staging, hosting open houses, coordinating showings and networking with other agents to find potential buyers, receiving offers from interested buyers and coordinating closing paperwork.


Exclusive Right-to-Sell Contracts

A seller will sign an exclusive right-to-sell contract with a listing agent that gives the agent's brokerage firm the exclusive right to the listing and establishes the terms of compensation. A typical breakdown of compensation has the brokerage firm paid commission on the sale with the listing agent receiving a portion of that commission. The agent is guaranteed a commission on the sale of the property so long as the sale occurs during the duration of the contract, even if that agent did not bring in the buyer. Once signed, a seller cannot hire other listing agents to list, show or market the property.


Dual Agents

A dual agent is an agent who represents both buyer and seller in a transaction. Despite being legal, a dual agent may not be optimal in representing each of the respective party's interests as sellers likely want to sell a property for an optimal price while buyers may want to get the best deal in the sale.


Transaction coordinator

The Transaction coordinator may assist the buyer, seller or both throughout the transaction. The coordinators may assist by presenting offers, help with the closing and other duties without being an agent for either party. Transaction coordinators must use reasonable care and skill in performance of any oral or written agreement. They are also obligated to make the same disclosures as Buyer and Seller Agents regarding adverse material facts actually known by the coordinator about the property and regarding a buyer's financial ability to perform under the terms of the contract. A written agreement is required for a transaction coordinator relationship with a buyer/seller.


Agents v. Brokers v. Realtors

A real estate agent has completed Colorado's pre-licensing class, passed the state's real estate license exam, undergone a background check and is required to complete continuing education classes to maintain an active license. A real estate agent has a license that is "parked" at a brokerage firm that allows the agent to assist buyers and sellers in real estate transactions. Real estate agents are paid commission upon the completion of the real estate transaction.


A real estate broker in addition to completing the same requirements as an agent, has also completed and has a broker license. A real estate broker may work independently (unlike agents that are required to "hang" their license at a brokerage) and may also employ real estate agents. A real estate broker is paid on commission and if the broker employs agents, also receives a portion of the commission paid to his/her agents.


There are three tiers of brokers: associate brokers (who have their broker licenses but choose to work under another broker and do not supervise other agents); managing brokers (who oversee daily operations of the office as well as transactions, hire and train agents and manage other staff in the office); and principals (one principal in a real estate office that supervises the agents and ensures that the agents are compliant with state and national real estate laws).


A realtor is a member of the National Association of Realtors or NAR. Realtors are bound by NAR's code of ethics and promise honesty and transparency and act in their client's best interests in all transactions. A realtor has an active real estate license, is actively engaged in the real estate business, has no recent filed or pending bankruptcy and has no record of sanctions for unprofessional conduct


Title Company

A title company provides the title insurance policy for the property. Title companies are frequently involved in closings. Title insurance protects against title defects like liens or encumbrances.


Lender

A lender may be a mortgage provider, a private party, the seller, a bank or a credit union. As a buyer you may interact with a mortgage broker or loan officer. There are exceptions, but mortgage brokers are licensed and regulated by the Colorado Division of Real Estate.


Lawyer

Lawyers play a necessary role in any part of a real estate transaction, residential or commercial. From drafting additional provisions in a Colorado approved form, creating custom purchase and sale agreements, reviewing and revising a title insurance policy, drafting amendments to purchase and sale agreements and resolving any disputes that may arise out of the transaction.


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