The sale or purchase of a home involves one of the largest investments that a person undertakes during their lifetime. It can be a complex, confusing, and intimidating process for any person to handle on their own. A licensed real estate professional can assist you by explaining and making you more comfortable with the process and by using their knowledge and expertise to make sure the transaction goes smoothly.
The Division is tasked with regulating certain real estate professionals through its licensing and enforcement duties. These regulated professionals are:
Working with a Licenced Real Estate Broker
When you hire a licensed real estate broker one of the first things you will do is enter into a listing contract as either a seller or buyer. This legal and binding contract will set forth the type of relationship that will be established between you and the broker.
It will also set forth:
- the services that the broker will provide to you;
- the compensation to be paid to the broker for those services rendered; and
- any other terms and conditions that you and the broker agree to.
How a Broker Represents You
In Colorado, one can enter into an agreement with a real estate broker where they represent you in an agency relationship, or as a transaction broker. In an agency relationship, the broker is an advocate for you, and promotes and acts in your best interests. As a transaction broker, the broker acts as a neutral or referee and is not an agent for either party, as they just assist in and facilitate the transaction between the parties.
Advantages of Working with a Broker
- Getting the property on the Multiple Listing Service for sale.
- Correct and marketable pricing of the home.
- Marketing the property effectively.
- Having access to buyer’s lists.
- Understanding the numerous real estate contracts and disclosures.
- Negotiating experience and expertise.
- Familiarity with the property locations and different types of properties.
How do I choose a broker?
There are many ways to find a real estate broker, for instance by asking family and friends, getting a referral from a real estate website, or even on social media. Whatever source you use, you can then go to the Division’s website to check on a broker's license status and to see if there is any public discipline.
Working with a Licensed Mortgage Loan Originator (MLO)
When purchasing a home you may need to obtain a loan and have a mortgage as a means of purchasing, requiring you to apply for a loan through the services of a MLO. The MLO guides you throughout the mortgage process, from offering and preparing the loan application through closing. You have a choice of working with a MLO prior to entering into a purchase contract in order to gauge what type of loan would be best for you and what you can afford, as a MLO is required to work in your best interests and offer loans that you can be successful with.
Prior to purchasing a home you may want to get a mortgage approval (often called a preapproval) in order to know how much you can afford. The MLO will be able to make that determination based on your credit, income and assets. You also have the option to start working with a MLO after you have gone under contract to purchase.
How do I choose a MLO?
There are many ways to find a mortgage loan originator or loan company, for instance by asking family and friends, getting a referral from your real estate broker, going to your local bank, or even using an online lender. Whatever source you use, you can then go to the Division’s website to check on a MLO’s license status and to see if there is any public discipline.
Working with an Licensed Appraiser
It is important to know what your home is worth and the appraisal will assist in getting the loan approval for your home purchase. Appraisals are an important part of the real estate transaction, as an unbiased professional opinion of a home's value and is almost always used in the purchase of a home, as well as refinancing your home.
In a home purchase, an appraisal is used to determine whether the home's contract price is appropriate given the home's:
- location, and
Usually your lender will choose the appraiser, and whoever takes out the loan pays for the appraisal, unless the contract specifies otherwise. When refinancing your home an appraisal assures the lender that it is not loaning the borrower more money than the home is worth.
Whatever source you use, you can then go to the Division’s website to check on an appraiser's license status and to see if there is any public discipline.
What does an appraiser do for you in the transaction?
An appraiser’s job is to determine the current value of a property for the potential buyer. Most of the work to determine the value of an appraisal is done during an on-site inspection.
The appraiser may also evaluate:
the current real estate market, and
considering comparable properties in the neighborhood in order to help evaluate the home's value or fair market value of the property.
Property Management Services
In Colorado, a licensed real estate broker can undertake property management services for a property owner. A property manager is typically hired to oversee the day-to-day operations of a real estate property. Property owners and real estate investors typically hire property managers when they are unwilling or unable to manage the properties themselves.
Property management is an on-going relationship between a real estate brokerage firm and an owner of a property in which the brokerage firm is designated to provide property management services. Property management services are the activities performed in leasing and subsequent management of a property on behalf of an owner.
A management agreement should be executed between a brokerage firm and an owner of a property in which a broker licensed with the brokerage firm is designated to provide property management services on behalf of the owner.
If the Broker is going to provide property management services, the Broker needs to provide a property management agreement which should outline the duties and responsibilities of both parties.
The property manager is also responsible for making sure that your rent and security deposits from tenants are protected.
How do I choose a Property Manager?
A good way to find a reputable property manager is by a referral from other property owners that use the services of a property manager to manage their property. Check with real estate brokers that also provide property management services. Also check with the Better Business Bureau (BBB) regarding any ratings for property management companies.