What are you signing? What you need to know when hiring a Realtor
on Thursday, November 29th, 2018 at 2:24pm.
Most people don’t realize that when they go to hire a Realtor what exactly is involved in that process or contract.The state of Colorado creates the contract that Realtors use and leaves room for the Realtor to fill in the exact terms.This contract is very important and should always be understood so that you know your rights and you understand what the agents job and responsibilities are to you.After all, you are paying them to sell your home.So lets go over the some of the basic sections shall we?
Section 1. Agreement: States that this is a real contract and is irrevocable.
Section 2.Broker and Brokerage Firm:Explains if the agent is with a multiple person firm or works alone (meaning they would be solely responsible).The agent will mark which is applicable.
Sections 3. Defined Terms:This sections is where your legal name goes along with the address of the home you are selling, how long you are in this binding contract with this agent, and then explains the definition of “day” so that everyone understands when the perimeters of said deadline.
Section 4. Brokerage Relationship: Your agent can act as a Seller Agency or as a Transaction Broker.The most common is Seller Agency; meaning that the agent is the only agent working for you.
Sections 5: Brokerage Duties: These are created by the state and explain in detail exactly what our unified job duties are to you as a client.
Section 6. Additional duties of Sellers Agent: If you have chosen to have your realtor work as a Sellers agency there are a few more duties we are upheld to execute:
6.1. Promoting the interests of Seller with the utmost good faith, loyalty and fidelity;
6.2. Seeking a price and terms that are set forth in this Seller Listing Contract; and
6.3. Counseling Seller as to any material benefits or risks of a transaction that are actually known by Broker.
Section 7. Compensation: This seems pretty obvious however its a pretty large section that covers the commission to be paid, any fees that agent may charge, how much you will pay the buyers agent and in the case of transaction agency what that compensation will be.
Sections 8. Limitation on Third-Party Compensation: Agents cant accept payment from outside parties
Section 9. Other Brokers’ assistance, Multiple Listing Services and Marketing: The subject property will or will not be put in the MLS
Section 10 Seller’s Obligations to Broker; Disclosures and Consent:Seller and broker will agree upon marketing and the seller is not a part of another listing agreement
Section 11. Price and terms: While an agent may suggest a price based on recent comparable sales, the price is actually determined by the seller. There are a few boxes that the agent will fill in that show an acceptable sales price for the home and other terms such as; earnest money, closing costs and loan types.
Section 13. Inclusions and Exclusions: Your agent will list all of the items that are included and excluded from the sale of the home in this section. This can later be negotiated between buyer and seller. ex: washer and dryer
Section 14.+15. TITLE: The seller is agreeing to provide a current commitment and an owners title insurance policy.The title company will do all of the work on this and simply provide it to you for review.
Section 16. Association Assessments: Any HOA or community fees will go in this section
Section 17. Possession: You’re going to want to put what your ideal date is to vacate the property, especially if it cant be done before a certain date + time.
Section 18. Material Defects, Disclosure and Inspection: the sellers property disclosure is provided by your agent for the seller to fill out.This will then get passed along to the buyer to review all of the adverse material defects that the seller is aware of pertaining to the property.
PER COLORADO STATE LAW: Colorado law requires a broker to disclose to any prospective buyer all adverse material facts actually known by such broker including but not limited to adverse material facts pertaining to the title to the Property and the physical condition of the Property, any material defects in the Property, and any environmental hazards affecting the Property which are required by law to be disclosed. These types of disclosures may include such matters as structural defects, soil conditions, violations of health, zoning or building laws, and nonconforming uses and zoning variances. Seller agrees that any buyer may have the Property and Inclusions inspected and authorizes Broker to disclose any facts actually known by Broker about the Property.
Sections 19-35: A bunch of legal contract jargon put in place by attorneys to protect all parties in case the deal falls apart.
RIGHT OF PARTIES TO CANCEL- Both parties have rights to cancel
FORFEITURE OF PAYMENTS- Concerns buyer not paying as agreed
COST OF SERVICES AND REIMBURSEMENT- Brokerage firm pays fots its expenses, seller pays fro theirs (agreed upon in Contract to Buy and Sell)
DISCLOSURE OF SETTLEMENT COSTS- seller agrees these change from company to company (e.g., attorneys, lenders, inspectors and title companies)
MAINTENANCE OF THE PROPERTY- Brokerage and Brokerage firm are not liable for maintenance of the property or damage to it.
NONDISCRIMINATION- dont discriminate- its a bad idea
RECOMMENDATION OF LEGAL AND TAX COUNSEL- always recomended… its a binding contract
MEDIATION- must start here if there are issues
ATTORNEY FEES- court awards to prevailing parties
ADDITIONAL PROVISIONS- any other terms requested by either party
ATTACHMENTS- if applicable
NO OTHER PARTY OR INTENDED BENEFICIARIES- this contract doesn’t benefit anyone but the parties in it
NOTICE, DELIVERY AND CHOICE OF LAW- contract can be hand delivered, electronically delivered or fax ( seller + agent select what they prefer to use)
COUNTERPARTS- if two parties sign separately the contracts must be combined
ENTIRE AGREEMENT- any outside agreements must be included in this contract or its no longer valid
COPY OF CONTRACT- you will receive a copy once you have signed and agreed.
Well, that about sums it up!I know, it seems like a joke but I actually just summarized the 10 page contract in 2 pages… you’re welcome. Each area holds a different level of importance based on the situation and terms that the seller provides. I bet you are super pumped to sell your home now huh?It may seem daunting but thats what your Realtor is for and I’m happy to help.
Questions or concerns?Please reach out firstname.lastname@example.org