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Why you need a Buyer's Agent...
Agency Law is a very complex subject. It has to be, there's much at stake for all parties concerned, including serious legal and financial risks if things go badly. Buying and selling real estate involves lots of money, disclosing confidential information, savvy, and will more often than not involve a few "surprises" that will test diplomacy skills and the resolve of all parties.
 Every state has real estate laws designed to protect consumers. Some states do a better job than others. The Colorado Real Estate Contract, (contract continuation) for example, comprises sixteen pages of legal covenants and requirements that even intimidate lawyers. As Colorado real estate agents (we're actually brokers, a level above agents), we undergo mandatory training each year on "contract updates", which usually means adding more stuff in the contract! In recent years, many new requirements were added to Colorado's contract that relate to new and timely issues such as: Foreclosures, short-sales, meth labs, financing and a variety of other topics.
Before engaging a real estate agent in Colorado, you should familiarize yourself with a few documents. The first is your rights to representation in a real estate transaction. When you buy real estate, the agent's commission is usually paid by the Seller. The agreement is consumated in the Seller's Listing Agreement with the Listing Brokerage. When the listing is placed in the Multiple Listing Service (MLS), the listing agent is notifying other agents that the Seller is willing to pay them a commission to help sell the property. The agent who brings the buyer is called the Selling Agent. When the sale is closed, both agents receive the commission they earned according to the terms of the listing agreement.
In Colorado, when you talk to an agent, the agent is required to give you a copy of the Colorado Definition of Working Relationships before ever discussing any personal information with you or taking you out to see property. If you aren't given one, demand one! You shouldn't share any personal information with an agent until you are protected by an agreement. The foundation of agency law is that no one can serve two masters. As with lawyers, you can only represent one party in a law suit, not both sides!
The definitions of working relationships are clear. If you decide you want exclusive representation as a Buyer, you will execute the Colorado Buyer's Agency Agreement. You can choose not to engage a Buyer's Agent. In that case you have two choices as defined in the disclosure: (1) to work with the agent under the Transaction Broker relationship, or (2) by default be treated as a Customer by that agent.
Neither of these choices afford you exclusive representation. The agent cannot be your advocate, has no duty to investigate, and cannot negotiate on your behalf. They must perform as an unbiased intermediary and facilitator.
Remember Murphy's Law: If things can go wrong, they will! Whenever two parties first meet (e.g., buyer and seller), everything usually gets off to a good start. Then things start to enter different phases and, slowly but surely, each party begins looking out for their own best interests. It might begin when the seller thinks your offer is too low, or worse, insulting. If continues when the property is inspected and, perhaps, radon or other problems are discovered. The seller might get defensive; you might get nervous. It gets more sticky when the appraisal comes and neither party likes the number! If your agent is treating you as a Customer, or is handling the transaction for both parties as a Transaction Broker, who's on your side? The agent is going to get paid by the Seller, and if this transaction folds, the agent knows someone will probably buy the property. Do you see any conflicts here...?
That's why you need a Buyer's Agent; that's what I do!
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