Realty 101 - Hiring a Broker

We are going to cover some of the basic information about hiring a Real Estate Broker including how and how much they are paid and what services you can typically expect from them.
Broker - Client Relationships First of all, please be aware that in Colorado, Real Estate professionals must take coursework and pass a Licensing Exam in order to represent the public in the sale or purchase of Real Estate. Persons who pass this coursework and exam are referred to legally as “Brokers”. One can choose to work associated with a company, such as Remax (a Broker Associate) or own her own real estate company (Broker Owner).
Brokers are called Brokers because you can have one working for you and not have the benefit of an Agency relationship. In Colorado, when you are ready to hire a Broker, you will sign an employment contract with them that specifies whether the Broker will represent your interests alone in all matters (Agency); or whether the Broker is there merely to conduct the transaction on your behalf (Transaction-Brokerage). You pay the same negotiated fee regardless of the relationship you choose.

The Employment Agreements Brokers have a fine line they must walk until they have been hired by you. When you meet a Broker, you want to ask them questions, get information and learn all you can from them. Legally, Brokers must clarify several things before providing you with information and soliciting information about your interests. Before hiring a Broker, there are several agreements which must be presented and signed before they can solely represent you. You will find complete details of these forms at my website under Mile High Guide – Realty 101.
Help! Part of my Home's Equity is becoming a Broker's Paycheck! This is how it generally works: you find a professional Broker who has impressed you with her market knowledge and ability to market your property, you like her company and responsiveness and you have decided to enter into contract with her to sell your home. But you wonder why are you paying so much for her services? First, bear in mind that you are paying two Brokers. A listing Broker is the Broker you have hired to help valuate, market and represent your interests in the sale of your property. They will be conducting the analysis necessary to make sure your home is properly priced and will be involved with your overall pricing strategy, they will market your home - what "marketing" means varies tremendously between Brokers - they will keep you informed and negotiate on your behalf regarding the price and terms of sale. The listing Broker puts your goods on the sale shelf, so to speak.
The Selling Broker is the Buyer's Broker, who has been contracted by a completely different party, the Buyer, to find a home suitable to their tastes and price. When this Broker shows your home to her Buyer Client, and presents the Broker you hired with her client's offer for your home, she is the party who sold your home, should you ultimately accept the offer.
As a result, your listing Broker shares his commission with the buyer's Broker. Virtually all homes are ultimately sold by a Buyer's Broker, so they are very important people to you.
Second, commission generally comes from your home’s equity so that you don’t have to come up front with the funds to pay the Broker. She will be investing her own funds into the creation of marketing products and spending sometimes hundreds of hours getting everything ready and then communicating with other Brokers once the home is on the market. You wouldn’t expect someone to come clean your home or provide some service without paying them. You wouldn’t want to go to work for free yourself. The situation is set up for your convenience so that you can have expertise and marketing without paying up-front; and to give the Broker an incentive to complete her job as quickly as possible.
Let’s all be experts! For more information on any Real Estate subject, visit my website or give me a call at (720) 275-3926.