I have heard stories from Colorado buyers agents who have worked with buyers for many months, showing homes on their dime and time, and then never receiving compensation for their work. This can happen unintentionally, a buyer does not realize that the compensation for the buyers agent comes at closing. The buyer will understand that the buyer agent has worked endless hours for them and in an effort to relieve some of the work, they have a sister or a friend write up and offer and submit it, cutting the buyer agent out of any payment.
This is one side of protection included in a buyer agency agreement, aka buyer broker agreement. It outlines the buyer’s duties to the buyers agent in order for the agent to receive compensation for their work in the end.
On the other hand, let’s say a buyer found a Denver agent they liked, but then found out the agent did not meet all of their specifications for a good agent. They do not have to sign the agreement with the unsatisfactory agent. They are free to interview buyers agents until they find the best fit for them. The buyer agent’s duties and responsibilities are also outlined in the buyer broker agreement.
This is a benefit to both parties to know exactly where the other stands. It also weeds out poor agents and non-serious buyers saving both parties time and money.
buyer agency agreement
A good buyers agent will be able to provide complete buyer representation and fiduciary responsibility to the home buyer. They will also have excellent negotiating skills, access to all for sale properties, and recommendations to quality local services in financing, inspection, and insurance. It is important for the home buyer to interview agents before signing a buyer broker agreement with them to be confident that they have the best buyer representation.
Wouldn’t it be helpful if everyone could share their experiences with brokers in a public place? We could all learn the good, the bad, the ups and downs. I would like to be the first one to share my most recent experience.
I went to a real estate agent to inquire about how realistic it would be to sell a piece of land in the Rocky Mountains. I was interested to view a comparable market analysis and see what was out there and what it was selling for.
Upon sitting across the desk, I got much more information that I was expecting. The agent swiveled her computer monitor my direction so I could see that the land’s value had dropped 21% over the last year! I have been affected by the decline in the economy as I am sure everyone else has, but not to this extent until that moment in time. Aside from the jaw dropping information, I also managed to acquire some great advice and good tidbits of information
When the snow falls it becomes much more difficult to sell land in the high mountains of Colorado.
The ground freezes and it is impossible to dig a foundation. Many people who buy land are looking to develop it. It is seen as a waste of time and money to buy land during a time of year when work can’t be done on it. Many land sales pick up around springtime in the Rockies.
Having water, septic, and electric run to the property can raise the land value significantly.
I discovered that because there are already many utilities run to the land and functioning that the asking value can be raised as much as $8-10,000! A little light in the darkness for me.
What is selling right now?
The places that are selling are lots with homes on them. The most popular selling price is from 150-200k in Grand County, Colorado. No one wants land because there are so many steals…I mean deals out there right now. Everyone wants to get something for nothing.
Banks are playing catch up.
People are finding homes they are interested in while driving around, but when they ask a buyers agent about putting an offer in no one seems to own it. There are so many foreclosures flooding the market right now that banks are putting paperwork on the backburner until they can get around to it. This way. the banks aren’t showing a loss because it isn’t registered yet the previous owners have already been evicted.
After hearing all of this I decided my best option would be to scrape up the money for taxes and utilities for a little while, at least until the ground thaws, and then chance putting the land on the market.
I was glad I went to and agent who knew what they were talking about regarding selling a home. However, it is also a great idea to go to someone who knows what they are talking about when you are considering buying a home, like a Colorado Exclusive Buyers Agent. These buyer agents can get you a comparable market analysis, recommendations for local insurance and inspections companies, and financing options. They are also highly skilled at negotiations at closing. Buyer agents will provide complete, 100% buyer representation.
Occasionally, people wonder if they can save money by NOT working with a buyer’s agent. Unfortunately, there are not many good sources on the web on this subject, so we created a video discussing both sides of the argument.
Transcript:
Many people wonder, “Can I save money if I don’t work with a buyer’s agent?” Most people conclude that home buyers will save money by working with an agent. In fact, “going it on your own” many times results in costly mistakes that do not become apparent until after closing Working with an experienced and trustworthy agent will help you save money by helping you identify a good investment (and avoid bad ones). A buyers agent can help you find good deals, handle all the negotiations, and advise you through the inspection process.
Some people believe that home buyers can save money by not working with a buyer’s agent. The main point on this side of the argument is that if you work with the listing agent, or the agent that represents the person selling the home, instead of your own buyer’s agent, there is an opportunity to ask for the buyer’s agent part of the commission that is built into the price of all homes for sale. Companies that sell their own listings receive double commissions—both the buyer and the seller’s sides.
But does this strategy actually reduce the purchase price of the home for the buyer? A relative of one of the authors of this site recently bought a home on his own thru a big portal site like Zillow, and found out to his dismay that he couldn’t get a loan because the appraisal came in $20,000 BELOW his final offer. This was a shock to him because he thought he had studied enough internet sites to know what to offer.
So that you can make an informed decision, lets look at facts a little bit closer.
When a person works with a real estate agent to sell their home, they enter in a listing contract with that agent. This contract determines the amount of commission that is reserved for the home buyer’s agent and the home seller’s agent. In Colorado, they are usually equal amounts, 2.8% each. If the home buyer and the home seller are represented by the same agent, that agent or brokerage may keep all of the commission. If a buyer is interested in a property within the same company where his buyer’s agent works, typically the company will designate one agent in that company to be the buyer’s agent and another agent to be the seller’s agent, so both sides of the commission can still be legally retained. This is called “designated agency”.
What does this mean? This means that the most money a home buyer could save by negotiating commission in Colorado is the 2.8% reserved for the buyer agent commission. Usually people who end up working directly with the seller’s agents are best protected if they hire an attorney to review their offer. This money has to be paid up front out of the buyer’s pocket, so if the deal does not go through, that money is lost.
Additionally, attorneys typically are knowledgeable about contract law, but not necessarily market conditions or the historical MLS information needed to make a good offer. So if you save, say, 2% off the offered price, but the property is actually worth 20% less than your offer, you end up losing much more money than if you had hired a professional to represent you.
So, in the end, a home buyer could potentially stand to gain a portion of 2.8% of the purchase price of the home and give up the option to having a professional that is working solely to protect their interests, not the home sellers, which is particularly important when it comes to negotiating. If a buyer chooses to shop for homes on a large portal site, there are many tools to help determine value.
These tools are intended only as a starting point for determining the market value of the home. For example, Zillow recommends (http://www.zillow.com/wikipages/What-is-a-Zestimate/) that in order to get an accurate current market value, home buyers should consult a professional real estate agent to take special features, location and market conditions into account. These three factors greatly affect a homes value, and an accurate value cannot be determined without properly accounting for them. Also, home buyers must consider the time it might take to learn all of the tools, do the research, and fine tune their negotiation skills before undertaking this approach.
Working with a buyer’s agent will not cost anything additional since the commission is built in to the price of the home, almost always without any out of pocket fees. Also, the home buyer will have maximum protection and professional advice throughout the home buying process.
As a home buyer, you want to know that you are making a good investment. Part of making a good investment means knowing the value of a home, in the current conditions. This way, you will know when to walk away from a bad deal. Or, recognize the deal of a lifetime if it shows up.
But how do you determine the value of a home? Is it the listed price or asking price of the home? Can online estimates be used? What factors contribute? What is the best way to get an accurate value? Determining the home value is complicated, and having a professional assessment is critical.
Zestimate does not account for location, upgrades or market conditions when determing a home value estimate.
Large real estate portal sites like Zillow have features that offer an estimated value of the home. However, these values are only estimates and do not account for some of the biggest factors of home value- like location, upgrades, and market conditions. This means that the values are not accurate, and Zillow warns that it is meant as an estimate, and that determining the actual value requires the help of a professional. Certainly, homes that have recently been remodled with a new kitchen or other feautres will be worth more than others, and factors like this cannot be ignored.
Without knowing the actual value of hte home, negotiations could prove disasterous. Every home owner wants to get a good deal for their money and make a solid investment. But, how can you get a good price without knowing the actual value?
Exclusive buyer’s agents accurately determine home value.
That is one reason it is so important to work with an experienced buyers agent. A buyer’s agent knows the value differences in different cities, and different neighborhoods. They are able to factor in the added value that a good location brings to a home. They know how much different upgrades are worth and can analyze comparable home values with consideration for differences like hard wood floors, new kitchens, finished basements, etc. Just as important, they are up to date on the constantly changing market conditions that can make it possible to pay less than normal for a more valuable home.
The bottom line is that an experienced buyer’s agent can thoroughly examine the home or property you want to buy, compare it to recent home sales, consider location and market conditions to determine an accurate current value of the home. Armed with this information, you will enter negotiations with confidence that you are informed about your investment. That way, you can correctly know whether are paying a fair price for the home, getting a great deal, or learn that the home is not as valuable as the home seller’s would like you to think.
To discuss your home search with a buyer’s agent, fill in our find an agent form today!
Grand County may be one of the most beautiful parts of Colorado I have ever seen. Nestled in the hills of Grand County, in between Fraser/Winter Park and Granby, is a community packed full of outdoor activities and a family-friendly neighborhood. The amenities within this close-knit community are endless.
If you are looking for a place to buy that has the ability to entertain all ages and still be able to find quiet and solace, Granby Ranch is a great option.
SolVista ski resort is right in the middle of the community. I spent a few years snowboarding on this mountain. It is a great place to learn and hone your skills. In the summer season, the mountain transforms into world class mountain bike terrain that challenges even the best of bikers. Headwaters Golf Course is another summer favorite. The course has views of the Continental Divide and your ball will sail through the air at this altitude. There are 3 miles of blue ribbon fishing along the Fraser river to test your skills as a fisherman.
Enjoy wildlife? You are in luck! There are 600 miles of hiking trails woven throughout the mountains. If you are hungry after all that hiking, the delicious Seven Trails Grille is a great place to stop and refuel. I had the pleasure of taking cooking lessons from the head chef, Karl Vogelbacher. I have found no match to the level of cooking he is capable of.
The best part? If your guests would like a place of their own while visiting, there are rental condos nearby or they can rent out Rivercamp: a fully stocked camp with cots, a fire pit, cooking utensils, tents on platforms, and a streaming river that parallels it.
There is also a members-only club. Membership to this club is included with the purchase of a home or lot in Granby Ranch. This club gives you unlimited skiing for immediate family at SolVista Basin, golf benefits and discounts, downhill bike benefits, and Fraser river fishing benefits. It is like buying everything you might possibly need at once.
Buyers can buy a home here for year-round living or as a second home. The second home choice is perfect for those who work in Denver and like to have a get away from the hustle and bustle of the city.
Whatever your choice, make sure you use a Colorado Exclusive Buyers Agent for your home purchase. These agents do not take any listings within their entire office and are therefore able to provide you with unbiased, 100% buyer representation. Whether looking in the mountains or looking in the city, these agents can help you find the home of your dreams at the price you have been dreaming of.
Get free real estate counseling and a list of all offices that service your area. Call 1-866-222-8937 or complete our easy-to-use online form. Find Your Dream Home!
