Steamboat Springs A new Colorado law will allow real estate agents and brokers to advocate the rights of their clients through the entire real estate transaction, even if the buyer and seller are using the same agency.
The law will benefit the public, Mitch Cantele said. Cantele is the co-owner and associate broker of RE/MAX Steamboat. He said the law matches the public perception that real estate agents represent their clients throughout the buying process.
"What it does is clarify and simplify the relationship that people have with real estate agents and brokers because the law is more in line with the way actual practices are conducted and the way the public views its relationship with brokers," he said.
Under the current law, if a buyer is represented by the same agency that listed the property the buyer is interested in buying, the buying agent would have to act as a neutral agent.
Debbie Campagnola, CEO of the Colorado Association of Realtors, said as a neutral transaction agent, the Realtor could not advocate the right of the client. That means the Realtor could not recommend how much money to offer, when to close and the terms to accept.
"It may be several months down the road that you have to change the relationship with the client and that confuses the public," Campagnola said. "You were the advocate and now you're not."
Cantele compared having one agency with both the buyer and seller to a divorce attorney that represented both the husband and wife. But while a conflict of interest is clear with only one attorney, the situation is different in a real estate office. Agencies, Cantele noted, generally have more than one agent. He said RE/MAX, for example, has 15 agents and could easily handle on Realtor representing a buyer and another Realtor representing the seller.
Campagnola said the law could change how agents in the same agency interact with each other. Under the new law, Campagnola said partners cannot tell each other about the buyer's or seller's motivations. For example, if a seller wants to sell quickly because of a pending divorce, that information could not be shared between agents in the same office.
"These are the kinds of confidentialities you can't tell the other partners," Campagnola said.
Cantele said about 95 percent of the time, the buying agent remains the buying agent throughout the buying process and there is not a conflict in interest. But all buying clients have to sign addendums to their contracts warning them that if they are interested in a property listed by the agency then the agent becomes the neutral transaction agent.
By January, those addendums will be taken out of the contract.
Sponsored by state Sen. Ed Perlmutter and state Rep. Lola Spradley, the real estate transaction bill was approved last month and will go into effect Jan. 1, 2003. Cantele said Colorado, which is one of the most progressive real estate states in the country, was not the first state to enact a law allowing a designated agent. He said states like Pennsylvania, Maryland and Delaware have such laws.
The law also clarifies that the public should not be held liable for acts or omissions of real estate brokers that have not been approved, directed or ratified by the individual seller.
For example, Cantele said, under the new law a buyer could ask a real estate agent if the washing machine worked and the agent may say yes even though it did not. And, if the agent said yes without the seller's authorization, then the agent, not the seller would be held responsible for the misinformation.