Colorado Real Estate Transaction Costs

How do you pay your Colorado real estate broker?

What is the most important question when buying real estate in Fort Collins, Colorado? Or anywhere else in the state for that matter? Most often, for my clients, the big questions deal with money, which starts with the property’s purchase price. Then add lender fees and a myriad of other charges that may apply (HOA, tax and utility proration, lender title insurance policy, recording fees, property insurance, etc.) which are usually lumped together into what is termed “closing costs”. Purchase price plus closing costs is the true cost to acquire the property.

What is not included in the buyer’s cost is payment of the brokerage fee, i.e. compensation to the real estate agent. This is customarily handled by the seller. Read on . . .

In my job, the property cost is almost always the key question. What’s the total cost? What will the monthly payment be? How much is the down payment?

After the cost of the property, transactional costs come front and center.

I am writing this post to clue you in on how you pay your real estate broker (also called “real estate agent” or “Realtor®”). I am also writing it so that you understand that it costs virtually nothing to put me to work and start that ball rolling in the Colorado real estate market.

Disclaimer – Rates of compensation in Colorado real estate vary. Many of these costs are at the discretion of the vendor or business owner and this post does not detail every cost you could face when taking part in the sale or purchase of real estate in Colorado.

HELPFUL LINK – Common Colorado Real Estate Contracts – Buyer Agency Contract – Learn How I Work With Buyers – Article by Paul Wozniak


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Who Pays, and How?*

In real estate transactions in Colorado that are handled by licensed real estate agents, the seller bears most of the burden of paying for the cost of broker services on both the selling and buying side of the transaction. It goes something like this. The seller hires a Realtor® or real estate agent. The seller signs a listing contract that containing details of the agreement between them and their agent and the agent’s brokerage. The listing belongs to the real estate brokerage with which the Realtor® is affiliated. If that Realtor® quits that brokerage and moves to another one, that current listing stays with the previous brokerage. They will then assign a new licensed agent to continue the process.

That listing belongs to the brokerage. The seller, at closing, pays their listing brokerage, who then shares part of that payment with the buyer’s broker as determined by the listing agreement. This payment compensates the buyer’s broker for their professional services representing the buyer in the transaction.

So, as a buyer, compensation to the brokers and brokerage are usually taken care of. It is not an additional cost to the buyer.

*This post refers to the majority of real estate transactions that happen with buyers and sellers that have hired licensed real estate agents in Colorado, and is not meant to be representative of all sales of real estate throughout the state of Colorado. 

When do you pay?

One of my favorite aspects of my job is the fact that I can go to work for you, and when I do, there is no clock that I punch that tracks what you owe me. I am, most often, paid at closing by the brokerage listing the property. I am paid a predetermined rate of compensation that will be well known to both of us well before it must be paid. There are very rare exceptions to this process that would be thoroughly explained should they impact your purchase.

Whether I’m helping you sell, or helping you buy, or both, I am not an hourly or salaried employee. After we agree to work together, I am not compensated until we close on a property, and those proceeds will most often be taken from the closing on any property we deal with.

This is important because it answers a question that many people have early in our relationship. I will often have an introductory meeting with clients, and during this meeting, those clients are unsure of whether or not that actual meeting is going to cost them anything. For me, in most cases, it doesn’t. Sitting down with me to talk about properties, to get to know me, to have some questions answered does not cost any money. When representing you in the purchase or sale of Colorado real estate, I am paid at closing.

When I set you up with a home search that sends listings of homes for sale to your email, I don’t tally up charges and send you a bill. When we meet and tour a property you own and talk about potentially listing it for sale, I don’t charge you anything at that time.

This isn’t to say that I work for free. I do need to be paid, but as a Colorado Real Estate Broker, I am paid at closing.

Other arrangements can be made. I am speaking of the majority of the time. The VAST majority of the time. In almost every case, when buying and selling real estate with my representation, I am paid by the seller at a predetermined rate of compensation that everyone has agreed to.

The way we work together is different from the way you will work with many other businesses and services. That is because the nature of real estate transactions make it in our best interest to form a  relationship. From my side of the relationship, I begin work for you, and I do that work until we sell your property, or find the property that you want to buy, and then I am paid at closing.

So, as we meet to get to know each other, I do not tally up the time we spent and charge you for it. If you call me with a question, and I answer in an email, you won’t receive a bill from me that charges you for this task. That’s not how it works.

I am paid for my services as a real estate broker and Realtor® in Colorado at closing. I am not an upfront cost. Communications with me, property details I send you, research I do, properties I tour, these are all part of my daily duties to my clients, and I do not charge per item, or per action. I am paid at closing.

I write this just in case you are keeping your toe out of the real estate waters because you might believe that as soon as you start talking to me, that you have to start paying me some sort of fee or retainer. That is not the case with me. I am paid at closing.

So, if you’ve been thinking of buying a home, or selling a home, make that call. Get the ball rolling. As soon as you hire me as your broker, I will begin work for you. Once we have successfully bought or sold your property (or both), I’ll be paid. At closing.

Throughout the years, home ownership has proven to be a very good investment. Give me a call and I’ll send you sales statistics on the Fort Collins residential market going back over 40 years along with current numbers for all segments of residential sales (new construction, resale, condo/townhome, detached) with median sales prices of all segments. It’s a great report that’s easy to follow.

YES! Have Paul send me a FREE CUSTOM REPORT on my Real Estate Situation!

I am never too busy for you! Or your referrals. Please allow me to bring my communication skill and intimate market knowledge to bear on your situation!

See Colorado Division of Real Estate Website