Buying a house in CO involves lots of forms & agreements designed to protect you (and the agent)
If you decide to work with a with a buyer’s agent in Colorado, you will be asked to sign a buyer’s agent agreement. A buyer agency agreement, also known as a buyer representation agreement, is a contract between a home buyer and a real estate agent that outlines the terms & conditions of their working partnership.
WAIT, what comes first?
This agreement follows the first one, “Brokerage disclosure to buyer definitions of working relationships” that is a Colorado Real Estate commission approved form. This form should be presented to the buyer at the first substantive contact. These seem to change every year, but take a look at this sample one here.
The buyer agency agreement is also a different contract than the purchase and sale contract. That contract is also approved by the Colorado department of regulatory agencies and you can go to the department website to get the latest versions of those kinds of contracts. Any significant alterations must be approved ahead of time by a Colorado real estate attorney. Alterations must be clearly outlined and still must comply with the state’s regulations.
Back now to your buyer agency agreement:
Many sections of this agreement are negotiable “fill in the blanks” sections. These clauses are negotiable. For example, sections that buyers want to pay special attention to include the buyer’s agent compensation, the termination clause, and the duration of the agreement.
Signing the buyer’s agency agreement gives buyers an assurance that the agent is going to be working in their best interest. Your agent agrees to do the best job for you . Your agent is loyal to you because they know you are not out there shopping for another agent. This agreement often has the word “exclusive” in it , meaning that you have agreed to work exclusively with that agent for the set duration. You cannot simultaneously work with other agents, with the exception that sometimes buyers are looking for property in two distinct, non-overlaping areas. Feel free to discuss how to best handle this scenario with the association manager here in Colorado.
Be aware that “Exclusive” is used in many circumstances
Please also keep in mind that an exclusive buyer agency agreement is different from an exclusive buyer agency (EBA) firm. An EBA firm is one where the broker owner and all agents in the office ONLY work for buyers and take no listings. EBA firms have become less frequent in recent years due to changes in real estate law, but a few still exist. Unfortunately there are no Exclusive Buyer Agency offices left in 2024 in Colorado that we are aware of as of this writing.
Term of a buyer agency agreement:
Agency agreements will generally last for a term of about four (4) to twelve (12) months, although the exact length is generally negotiable. If the buyer purchases a property while the contract is valid, the agent will be entitled to receive payment. The term doesn’t really matter if you have a good termination agreement as descrbed below.
What is included in the buyer’s agent agreement?
This agreement has several sections.
The first three sections set the date, the type of representation (buyer agency), and what kind of firm you will be working with.
Next, it defines the terms included in the agreement including who is the broker, whether the sought property is residential, commercial, or land, and who is the buyer.
The services and duties of a buyers’ agent are defined.
This section I think is particularly interesting. Unofficially, it explains that the broker must “look out for” the buyer. Officially, it says the buyer’s agent job is “Promoting the interests of Buyer with the utmost good faith, loyalty and fidelity.” The buyer’s agent becomes a a fiduciary, which means they must offer: loyalty, accounting, reasonable care, confidentiality, disclosure, obedience, and reasonable care and diligence.
For example, if the broker knows something bad (or, officially “adverse material facts”) the buyer’s agent has to tell the buyer. They must also share with you the seller’s disclosure of possible problems with the property, although that list is based on the seller’s memory, and is mostly a heads up about potential issues that are still pending or were recently resolved. Inspections are the most reliable form of knowing potential problem areas and these are usually paid for by the buyer. Your buyer’s agent will recommend ones from a long list, depending on the house and how much you want to know in advance of a purchase. Some of these inspection items such as sewer, meth, lead paint, electrical etc. are listed in our recommended questions for your buyer’s agent. These questions are included in every email the association sends you about our buyer agent members.
A loyal agent is not allowed to reveal your secrets to the seller. An important secret a good buyer’s agent will not reveal is if you are willing willing to pay more than your offer. Since the seller is likely to counter, the buyer must keep that information secret so they do not lose leverage in the negotiating process. Also, your motivations and deadlines for moving should not be disclosed to the seller’s agent without your permission.
How much does a buyer’s agent get paid?
Historical perspective: This is always negotiable, and agents can go to jail if they price-fix between companies. See the updated page on this topic here. Historically, in the Denver metro area, buyers often saw about 2.8% buyers agent compensation, based on the purchase price and payable at closing. Historically this was disclosed in the multiple listing service and was covered in the seller’s agreement. Outside of Denver, buyers agents were more often offered 3%. A buyer could see that if the agent shared with them the information from the multiple listing service or MLS. Many buyers agency agreement would loosely just say they would just get paid the co-op fee offered by the seller in the MLS.
However, in July 2024, that information will no longer be allowed in the MLS. Everyone agrees though that buyer agents must get paid somehow, preferably for many as still a commission at closing. There are many other avenues other than the MLS to find out what the seller is willing to cover. So, the most important question for 2024 and beyond is for buyers to include in their interview questions that important one of “how do you get paid”?
Standard contract language:
No discrimination. What to do in case of a conflict, etc. This is pretty much boilerplate contract language.
Do Ask your agent how the contract can be terminated should things go south:
What if you decide days or weeks into the buyer agency contract that you don’t like you agent and want to switch to another? Most agents will honor your decision to terminate in a manner that seems fair to both of you. That should be in writing in your agreement. Just be sure you look that over before signing with an agent so you know what to expect.
I can’t even remember the last time a buyer decided to change agents after selecting one of our members. However, we do sometimes get buyers who want to change an agent they engaged prior to coming to our site. If that is your situation, feel free to call the association headquarters and ask the association manager to talk you through the best process for doing this.
Everyone is advised to carefully read through buyer agency agreements, especially first time home buyers. All of our member buyers agents have expertise in working with 1st X homebuyers and will take the time to carefully go over each section of the agreement. Feel free to click here to get a list of qualified agents who are members of the association and who specialize in the Colorado cities and neighborhoods that you are most interested in.
COLORADO BUYER AGENCY AGREEMENT Sample:
Below is an example of a buyer agency agreement available at eforms.com: This sample is from 2020, so get a sample current agreement from the agent you hope to work with before signing it.
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I. The Parties. This Colorado Buyer Agency Agreement (“Agreement”) made on
____________________, 20____ is by and between:
Buyer: ____________________ with a mailing address of _____________________________,
City of ____________________, State of ____________________ (“Buyer”)
AND
Agency: ____________________ (“Broker”) of ____________________ (“Agency”) with a
mailing address of _____________________________, City of ____________________, State
of ____________________. Collectively, the Buyer and Agency shall be referred to as the
“Parties”.
If for any reason the Broker is not able to fulfill their duties under the terms and conditions of this
Agreement, another agent from the Agency may be appointed during the Listing Period of this
Agreement. Any person or entity that the Buyer enters into a contractual agreement for real
estate shall be referred to as a “Seller” in this Agreement.
II. Services Provided. Buyer hereby agrees to hire the Agency on a(n): (check one)
☐ – Exclusive Basis: To accept the terms of this Agreement and communicate with the
Agency on an exclusive basis in their efforts to assist in acquiring real property that
meets the wants and needs of the Buyer through either purchase, option, exchange,
trade, or lease. The Commission, under an exclusive basis, is due and payable even
under the circumstance the Buyer acquires real property on their own without the
assistance or involvement of the Agency.
☐ – Non-Exclusive Basis: To accept the terms of this Agreement and communicate
with the Agency on a non-exclusive basis in their efforts to assist in acquiring real
property that meets the wants and needs of the Buyer through either purchase, option,
exchange, trade, or lease. The Commission, under a non-exclusive basis, is due and
payable only if the Buyer acquires real property with the assistance and involvement of
the Agency. In the event the Buyer purchases real property during the Listing Period
without the use of the Agency, the Agency shall not be due a Commission.
III. Period of Agreement. This Agreement shall start on ____________________, 20____
(“Effective Date”) and end on ____________________, 20____ at 12:00 midnight (“Listing
Period”), unless the expiration date is extended in writing.
a.) Listing Period Extension. The Commission provided shall be due if real property is
acquired in accordance with Section II within ____ days (“Extension Period”) after the
expiration of the Listing Period to anyone with whom the Broker or Agency has
negotiated unless the Buyer is in agreement, in good faith, with another real estate
agency. The term “negotiation” shall include obtaining information about real property,
showing real property, or presenting an offer on the real property. All rights under this
Section shall terminate upon the expiration of the Extension Period.
IV. Compensation. In the event real property is acquired under Section II of this Agreement,
the Buyer agrees to compensate the Agency under the following terms and conditions:
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a.) Listed Property. To pay the Agency a commission in the amount of ____% or
$____________________ of the purchase price or the amount offered by the listing
agency, whichever is greater (“Commission”).
b.) Unlisted Property. To pay the Agency a commission of ____% or
$____________________ (“Commission”).
c.) Retainer Fee. This Agreement shall have ☐ no retainer fee ☐ a non-refundable retainer
fee in the amount of $____________________ to obtain the Agency’s services under
this Agreement (“Retainer Fee”). If a Commission is paid the Retainer Fee shall be
deducted from the total Commission amount. The Commission is due and payable at
closing by the Buyer. The amount or rate of real estate commissions is not fixed by law.
The commission is set by each Broker individually and may be negotiable between the
Buyer and the Broker.
d.) Leasing. During the Listing Period, if the Agency finds a ready, willing, and able
Landlord that agrees to rent real property to the Buyer, the Agency shall be due
____________________ percent ( ____% ) of the total rent amount stated in the rental
agreement for the lease term. The lease term shall be defined as the period between the
start and end dates listed in the rental agreement, not including any renewal period(s). If
the Buyer agrees to rent the real property on a month-to-month basis, the Agency shall
be due the equivalent of one (1) month’s rent (“Commission”).
V. Buyer’s Identity. The Buyer agrees and directs the Broker to: (check one)
☐ – Disclose the Buyer’s Identity. When presenting an offer, orally or in writing, the
Broker agrees to disclose the identity of the Buyer.
☐ – Exclusive Basis: When presenting an offer, orally or in writing, the Broker agrees to
keep the Buyer’s identity anonymous. The Buyer’s identity must remain confidential
through the expiration of the Listing Period unless written consent is granted by the
Buyer. If the Buyer’s identity is released by the Broker during the Listing Period, the
Buyer shall be entitled to monetary damages equal to the fullest extent under law.
VI. Agency Disclosure. Buyer recognizes that, under this Agreement, a relationship has been
established between the Buyer and Agency. The Agency’s policy regarding other agents,
specifically those not represented by the Agency, includes, but is not limited to, cooperating with
other agencies acting as listing agents, sharing compensation with listing agents, and paying
other agencies in the same manner representing their Sellers.
VII. Disclosed Dual Agency. Due to certain events, the Broker may be required to act as the
only licensee involved between the Buyer and Seller to facilitate the transaction between the
parties. Under such circumstance, the Broker shall disclose to Buyer their intention to act as a
disclosed dual agent or similar role. If a Seller of real property is produced by the Broker, or by a
licensee in the same Agency as the Broker, the Buyer consents to the Broker acting in such a
role and agrees to allow the Broker to collect compensation from the Seller or other parties.
While performing this role, Broker agrees to conduct themselves in a manner that does not
adversely affect the Buyer or Seller in any way, including, but not limited to, stating the Seller is
willing to sell for a lesser price than the asking price, stating the Buyer is willing to pay more
than an offer that is made or suggested, or disclosing any type of financial information that
would negatively affect the other party.
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Buyer has read this Section and fully comprehends and understands the concept of Disclosed
Dual Agency under the laws in the State.
Therefore, the Buyer hereby agrees to ☐ ALLOW Disclosed Dual Agency ☐ NOT ALLOW
Disclosed Dual Agency.
VIII. Buyer’s Duties. Buyer agrees to work with the Agency in accordance with Section II of this
Agreement in addition to the following:
a.) Financial Records. Buyer agrees to submit any and all financial information to the
Agency in order to verify the Buyer’s ability to purchase real property. This includes, but
is not limited to, documentation related to tax returns, pay stubs, bank statements, credit
reports, pre-qualification or pre-approval letters, outstanding debts or liens, certificates of
ownership, and any other information that may assist in the Buyer’s ability to purchase
real property.
b.) Contact with 3rd Parties. Buyer recognizes that for the Agency to perform their services
to the best of their abilities, that the Buyer contact the Agency before visiting an open
house, contacting another agency, contacting a homeowner directly, or making any type
of communication that involves expressing interest in real property.
c.) Exclusive Responsibility. Buyer recognizes that ultimately it is their sole responsibility
to verify any and all information provided to Buyer by the Broker. Furthermore, Buyer
agrees to indemnify and hold the Broker harmless from any and all loss, cost, expense,
attorney fees, damage or claim arising out of this Agreement, including without limitation,
liability resulting from incomplete or inaccurate information provided to Broker.
IX. Disclaimer. Buyer acknowledges that the Broker is not a professional or expert in the
matters of law, Federal or State tax codes, financing, surveying, engineering, architectural,
structural, environmental, other physical conditions or non-physical details of real property. In
addition, the Broker has advised and recommended the Buyer to seek expert assistance for
advice on such matters. Broker makes no warranty or guarantee concerning the service of such
experts or their products, the condition of property, the absence of defects therein, or the
suitability of such property for Buyer’s purposes.
X. Dispute Resolution. In connection with the purchase of the real property, the Buyer and
Broker mutually covenant, stipulate and agree that in connection with the resolution of any
dispute or controversy arising out of or relating to this Agreement or concerning the real
property covered hereby, or the breach, termination, or validity thereof, shall be administered by
submitting to binding arbitration. Due to this Agreement involving interstate commerce, the
Agreement has been and will continue to be regulated by the laws in the United States of
America; and, that the contract(s) entered into by the Parties concerning the real property
evidence transactions involving and affecting commerce. The Parties agree that all disputes not
barred by applicable statutes of limitations or otherwise barred by law, resulting from or arising
out of this Agreement or the purchase contemplated; that Buyer and Broker agree to submit
such dispute(s) to binding arbitration, pursuant to the provisions of 9 U.S.C Section 1, et seq
and according o the Commercial Rules of the American Arbitration Association then existing in
the County where the real property being sold and located. The prepaid arbitration filing fees
and all other prepaid costs of the arbitration proceeding shall be paid by the party seeking to
invoke said arbitration, with the assignment of those costs to be divided between the parties as
the arbitrator sees fit in setting the Arbitration Award. It is hereby agreed that it is the intent of
the Parties that the Arbitrator’s Award is to be final and binding and judgment upon the award
rendered by the arbitration may be entered in any court having jurisdiction thereof. THIS
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ARBITRATION SHALL BE IN FULL LIEU OF ANY CIVIL LITIGATION IN ANY COURT, AND IN
LIEU OF ANY TRIAL BY JURY.
XI. Fair Housing. Broker agrees and adheres to the standard of showing real properties made
available to the Buyer without regard to race, color, religion, age, handicap, familial status, or
national origin.
XII. Other Clients. Buyer is aware and acknowledges that the Broker may or may not have
other clients with similar wants and needs. Broker shall not favor any client over the Buyer for
any reason.
XIII. Binding Effect. This Agreement shall be binding upon the Buyer’s successors, assigns,
heirs, and beneficiaries.
XIV. False Information. Buyer agrees to indemnify the Agency and hold harmless from any and
all claims, which may lead to a dispute, due to false information provided. Such indemnification
shall include the Buyer’s reimbursement to the Agency for any attorneys’ fees arising from any
dispute brought against the Agency.
XV. Legal Signature. This Agreement may be executed and delivered by any party herein by
sending a facsimile of the signature or by a legally recognized digital or electronic signature.
Such legal signature shall be binding on the party so executing it upon receipt of signature by
the other party.
XVI. Governing Law. This Agreement shall be governed under the laws located in the State of
Colorado.
XVII. Severability. This Agreement shall remain in effect in the event a section or provision is
unenforceable or invalid. All remaining sections and provisions shall be deemed legally binding
unless a court rules that any such provision or section is invalid or unenforceable, thus, limiting
the effect of another provisions or section. In such case, the affected provision or section shall
be enforced as so limited.
XVIII. Additional Terms and Conditions. __________________________________________
____________________________________________________________________________
____________________________________________________________________________
XIX. Entire Agreement. This Agreement constitutes the entire agreement between the Buyer
and Broker and supersedes all prior discussions, negotiations, and agreements between the
Buyer and Broker whether oral or written. Any understanding, agreement or promise shall bind
neither Buyer not Broker, expressed or implied, not specified herein.
This Agreement is intended to be the legal and binding agreement of the Buyer and Broker. The
Parties acknowledge receipt of a signed copy of this Agreement.
Buyer’s Signature _____________________________ Date: ____________________
Print Name _____________________________
Buyer’s Signature _____________________________ Date: ____________________
Print Name _____________________________
Broker’s Signature _____________________________ Date: ____________________
Print Name _____________________________
Agency Name: _____________________________
