“Agent” is the name that has always been synonymous with “Realtor ®”. The Common Law of Agency commands complete loyalty, confidentiality, obedience, and promotion of the client’s interests above even the agent's.
True agency is demanding and impossible to execute without compromise for anyone trying to work for buyers and sellers at the same time. So the real estate industry has created a facilitator status for brokers, making it legal for Realtors® to work with the buyer and seller both in the same transaction, even though it means providing reduced services to buyers and sellers.
Colorado calls this facilitator a Transaction Broker, and passed a law in 1994 dictating that all brokers, by default, are Transaction Brokers unless they have an agency agreement to be a true agent for either a buyer or seller. Since a transaction broker is not representing anyone, he can work with the buyer or the seller, or both, without having to lose business by referring either one out to another company.
Problem is, many buyers and sellers don’t see any advantage to paying a Transaction Broker for not representing them. So the Colorado Association of Realtors lobbied the State Legislature to sanction "Designated Brokerage" as a remedy to the no agency problem. The office’s employing broker can “designate” one of his employed brokers to represent the buyer and another of his employed brokers to represent the seller, in the same “in house” sale of one property. On the surface, the problem appears to be solved – the buyer and seller can feel they’re being represented, and the company doesn’t have to lose either one to another office for representation.
Before the Designated Brokerage changes to license law were ratified, we, along with other buyer agents in Colorado, tried to convince legislators to require certain critical disclosures to all buyers and sellers. We believe that buyers and sellers working with an office that represents both should be told up front that giving confidential information to anyone in that office, except their own agent, could most certainly work against them in their negotiations. Within an office, brokers talk at the water cooler and usually have access to all the working files. They have the same receptionist, fax machine, central files, and they sometimes even share an assistant. There’s a strong possibility that a broker who comes across your sensitive information could turn out to be the broker for the other party in your transaction to buy. And as an agent for the other party, he’s legally obligated to tell everything he finds out about you to his client.
We believe that Colorado lawmakers unwittingly sanctioned UNDISCLOSED DUAL AGENCY by sanctioning the practice of Designated Brokerage.
Almost any real estate broker will tell you he can "act" as your buyer agent, but we're not acting. All of those guys can do whatever, but we believe that you deserve representation from an agent who is fully committed to promoting your interests 100% of the time. We don't switch hats.
We believe that your choice of what type of agent working under what type of agency (or none, as in the case of a Transaction Broker), can be the single most important choice you'll make in the entire process. That choice will affect every aspect of your purchase transaction.
It would be impossible for a real estate person to be a Transaction Broker during negotiations for his own home, since he couldn't help but promote his own interests. Or for an employed broker to represent you as a Designated Broker/Buyer’s Agent, without conflicts, to help you buy a house listed by his employing broker. So don't be fooled into thinking that he can only have your interests at heart.
All of us at Buyer Broker’s of Boulder are committed to working only for buyers as Exclusive Buyer's Agents. We promise to treat your home purchase with as much care as we would our own, without compromise. Who wouldn't want that?
-Alta Drumm, 2003