Colorado guide

Colorado Transaction Broker Default Relationship

In Colorado, if you don't sign a written single-agency agreement, your real estate broker is automatically a transaction broker.

Reading as buyer.

TL;DR

In Colorado, if you don't sign a written single-agency agreement, your real estate broker is automatically a transaction broker. A transaction broker helps you through the deal but does not owe you the full loyalty a traditional agent owes. You can choose single agency instead, but you have to ask for it in writing.

Before you start — 8 things to know

  • Colorado's default brokerage relationship is transaction brokerage, so unless you sign a written single-agency buyer agreement, the broker showing you homes is a transaction broker by law.

  • A transaction broker in Colorado is not your traditional fiduciary agent and does not owe you undivided loyalty, so they can help the seller through the same deal under defined statutory rules.

  • Colorado replaced the concept of dual agency with transaction brokerage, so you will not see Colorado brokers offering what other states call dual agency.

  • Your transaction broker still has to disclose any known adverse material facts about a property you are considering, like a leaky roof or a known foundation problem.

  • Your transaction broker must present every offer you make to the seller in a timely manner and cannot sit on it to favor another buyer.

  • A transaction broker must keep the confidences you share with them, except where Colorado law requires disclosure, so private things like your maximum budget are protected by statute.

  • If you want a broker who owes you full fiduciary loyalty as a buyer, you must specifically elect single-agency representation and sign a written single-agency buyer agreement before that relationship exists.

  • At first substantive contact, the broker must hand you a Colorado Brokerage Relationships Disclosure that names which relationship is in effect for you, and you should read which box is checked.

The timeline — step by step

  1. At your first real meeting with a Colorado broker, ask for and read the Brokerage Relationships Disclosure form, which tells you whether they will work as your transaction broker or single agent.

  2. Decide upfront whether you want a transaction broker, which is the default, or single-agency representation that owes you full fiduciary duty.

  3. If you want single agency, sign a written single-agency buyer agreement before touring homes, because without that signed agreement Colorado law treats the broker as a transaction broker.

  4. While touring properties and writing offers, expect your transaction broker to present every offer you write and to disclose any adverse material facts they know about each home.

  5. If you change brokers or move to a different transaction, you receive a new disclosure form at first substantive contact, and any new single-agency relationship has to be in writing again.

  6. At closing, your transaction broker has to account for every dollar of earnest money and any other funds or property they handled for you.

Common questions

What is a Colorado transaction broker and how is that different from a buyer's agent in other states?
A Colorado transaction broker is a licensee who helps both sides of a deal under a limited set of statutory duties instead of acting as a traditional fiduciary agent for one side. They must present offers, disclose adverse material facts, account for money, and keep confidences, but they do not owe you the undivided loyalty a buyer's agent in many other states would owe.
Can I still get a buyer's agent who only works for me in Colorado?
Yes, but you have to specifically elect single-agency buyer representation and sign a written single-agency buyer agreement before that relationship is created. If you skip that paperwork, the broker is a transaction broker by default no matter what either of you intended.
Will my transaction broker tell the seller my maximum price or how badly I want the house?
No, a Colorado transaction broker is required by statute to keep your confidences except where the law requires disclosure, so things like your top budget or your motivation are protected. They also cannot disclose the seller's confidences to you, which is part of how the limited-loyalty model works.
Do I have to sign the Brokerage Relationships Disclosure form before I can tour a house?
You are not signing a contract by acknowledging the disclosure; you are confirming that the broker explained which relationship is in effect at first substantive contact. The broker is required to provide it, and reading it tells you whether they are working as a transaction broker or as a single agent for you.
If my transaction broker also works with the seller, who is really on my side?
Under Colorado's transaction brokerage model, the broker is not on either side in the traditional sense; they are a neutral facilitator with defined duties to both. If you want someone whose only job is to advocate for you, you need to sign a single-agency buyer agreement before that representation exists.

Glossary

1 term
MLS — Multiple Listing Service
The shared database agents use to list and find homes for sale. Most homes you'll see online started here.

Sources

  1. [1]
  2. [2]

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