Homebuyers and home sellers hire real estate brokers to assist them with what is commonly the largest financial transaction in most people’s lives. In today’s real estate world, there is a copious variety of business models seeking to serve the needs of homebuyers and sellers. As markets change, types of real estate business models change and evolve with the market. When the market heated up prior to the recession, a business model evolved called limited service companies. The fees charged and services rendered varied greatly. The fees, commissions, and services are 100 percent negotiated between a broker and their principal. The Division of Real Estate does not regulate commissions or services offered. However, the level of services dropped so low, in some cases, that both brokers and their clients were contacting the Division of Real Estate for clarity regarding the minimum amount of service required was to serve the home buying and selling public.
After so many inquiries, the Division of Real Estate introduced Commission Position #36, known as CP-36. That position re-states Colorado statutory law, C.R.S 12-61-804, listing the services that a real estate broker must provide at a minimum, acting in the capacity of a single agent. In fact, those minimum service requirements are listed in the Exclusive Right to Sell Listing contract. Real estate brokers are not allowed to cross out those requirements in an effort eliminate those services, as the Colorado statute does not permit brokers to perform less than the statutory duties.
The list of minimum services, also known as uniform duties, is listed below, directly from Section 5 of the Colorado Exclusive Right to Sell Contract:
Brokerage Firm, acting through broker, as either a transaction-broker or a seller’s agent, must perform the following uniform duties when working with seller:
- 5.1. Broker must exercise reasonable skill and care for seller, including, but not limited to the following:
- 5.1.1. Performing the terms of any written or oral agreement with seller;
- 5.1.2. Presenting all offers to and from seller in a timely manner regardless of whether the property is subject to a contract for sale;
- 5.1.3. Disclosing to seller adverse material facts actually known by broker;
- 5.1.4. Advising seller regarding the transaction and advising seller to obtain expert advice as to material matters about which broker knows but the specifics of which are beyond the expertise of broker;
- 5.1.5. Accounting in a timely manner for all money and property received; and
- 5.1.6. Keeping seller fully informed regarding the transaction.
- 5.2. Broker must not disclose the following information without the informed consent of Seller:
- 5.2.1. That seller is willing to accept less than the asking price for the property;
- 5.2.2. What the motivating factors are for seller to sell the property;
- 5.2.3. That seller will agree to financing terms other than those offered;
- 5.2.4. Any material information about seller unless disclosure is required by law or failure to disclose such information would constitute fraud or dishonest dealing; or
- 5.2.5. Any facts or suspicions regarding circumstances that could psychologically impact or stigmatize the property.
- 5.3. Seller consents to broker’s disclosure of seller’s confidential information to the supervising broker or designee for the purpose of proper supervision, provided such supervising broker or designee does not further disclose such information without consent of seller, or use such information to the detriment of seller.
- 5.4. Brokerage firm may have agreements with other sellers to market and sell their property. Broker may show alternative properties not owned by seller to other prospective buyers and list competing properties for sale.
- 5.5. Broker is not obligated to seek additional offers to purchase the property while the property is subject to a contract for Sale.
- 5.6. Broker has no duty to conduct an independent inspection of the property for the benefit of a buyer and has no duty to independently verify the accuracy or completeness of statements made by seller or independent inspectors. Broker has no duty to conduct an independent investigation of a buyer’s financial condition or to verify the accuracy or completeness of any statement.
- 5.7. Seller understands that seller is not liable for broker’s acts or omissions that have not been approved, directed, or ratified by seller.
- 5.8. When asked, broker will/will not disclose to prospective buyers and cooperating brokers the existence of offers on the property and whether the offers were obtained by broker, a broker within brokerage firm or by another broker.
If there was any question on minimum service in Colorado, the Commission has clarified that, regardless of the level of fee to be charged. A broker must perform all of the minimum duties and obligations set forth by the State Legislature in the Brokerage Relationships Act, C.R.S. § 12-61-801, et seq.
By Duane Duggan, RE/MAX of Boulder. Duane has been a Realtor for RE/MAX of Boulder in Colorado since 1982 and has facilitated over 2,500 transactions over his career, the vast majority from repeat and referred clients. He has been awarded two of the highest honors bestowed by RE/MAX International: The Lifetime Achievement Award and the Circle of Legends Award. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail Duane at DuaneDuggan@BoulderCo.com, call 303-441-5611, or visit boulderco.com.