Little known fact. In Colorado you have not two, but three choices on how to sell your home. Most people know about the most popular option, which is to work a real estate agent or broker. The second option would be to sell the home on your own. In real estate we call this a "FSBO", which stands for "For Sale By Owner". However, there is a third option as well. Unique to Colorado (plus a few other states) you can simply hire a Transaction Broker (TB) to complete your sale. This third option takes advantage of the experience of a real estate agent, albeit on a much more limited basis, saving a seller thousands of dollars.
To make the three options easier to understand, I have outlined explanations for these different approaches to selling your home, as well as the pros and cons of each.
- Real Estate Agent/Broker works on behalf of only a seller (or only a buyer, but this blog is focused on the sale of a home, not purchase), by advocating, directing, advising, and negotiating on the client's behalf. An agent will guide his or her clients through the important decisions during a sales transaction including making recommendations on which offer may be the best to accept. In Colorado, client and agent are required to sign an agreement defining their relationship. One of the drawbacks is the expense to hire a broker, since the commission is typically 6%, which is split between the seller's agent and the buyer's agent. A major benefit hiring a broker is that he or she has a fiduciary responsibility to represent the interests of a client above the interests of the other party.
- For Sale By Owner (FSBO) is when a seller decides to sell a home on his or her own. While a huge benefit is the savings on commission fees, all FSBO sellers will still pay a commission to the buyer's agent in order to attract buyers to come see their home. While there is potential to save thousands of dollars, there are several tasks a seller will have to manage without an agent's guidance, including pricing your home, choosing a title company, holding Open Houses, printing and mailing flyers, creating a targeted marketing campaign, not to mention the 30-50 pages of documentation required to get the sale complete. Learn more about FSBOs here.
- Transaction Broker (TB) - unique to Colorado and a few other states, a transaction broker, on the other hand, simply provides assistance to a seller (or a buyer). According to the Colorado Real Estate Manual, a transaction broker is a broker who assists one or more parties throughout a contemplated real estate transaction with communication, interposition, negotiation, contract terms and the closing of such real estate transaction without being an advocate for the interests of any party to such transaction. In other words, a transaction broker assists a party (or both parties) to the transaction without representing either of them or being their agent. The drawback to choosing a TB is that your agent is not acting as your fiduciary and, therefore, does not have to recognize or hold your best interests in mind. He or she is a hired gun to process the paperwork and ensure deadlines and protocols are met for you. In fact, in Colorado a TB can work for both the seller and the buyer, because the agent is not a fiduciary to either party. The biggest benefits that the seller will only pay a TB a negotiated fee, instead of a full commission.
If you have been following Louisville Realty Associates on social media you will know that we provide regular updates on what we think home owners and home buyers may be like to know. We also provide snapshots of market data for East Boulder County. While it is easy to get lost in the multitude of statistics available for everyone to look at online, we always keep our data sweet and simple. Check out recent East Boulder Town market statistics here. At Louisville Realty Associates, our wonderful agents have the experience, energy and depth of knowledge to help you list your home for the best price. You can reach us anytime at firstname.lastname@example.org.
Like LRA's Blog? Please Follow!