By Prerna Kapoor, CLHMS | REAL Brokerage | May 25, 2026
One of the most common things I see at the first meeting with a new buyer is the moment they realize Colorado works differently than every state they’ve lived in before. They expect their agent to be their advocate, full stop. Then I explain that in Colorado, by default, I’m actually something called a transaction broker, and the conversation gets quiet for a second.
This isn’t a small distinction. It changes what your agent is allowed to tell you, what they’re allowed to negotiate on your behalf, and who pays the price if something goes sideways at closing. So let’s actually talk about what these two relationships mean and how to pick the right one.
The Two Brokerage Relationships Colorado Recognizes
Colorado has its own set of brokerage rules under the Colorado Real Estate Commission. There are two main relationships a buyer or seller can have with a real estate agent. The first is a “transaction broker.” The second is a “single agent,” which Colorado calls “agency.”
A transaction broker assists you with the transaction. They help you fill out the paperwork, schedule inspections, and get to closing. What they don’t do is owe you what’s called fiduciary duty, which means they aren’t legally required to act with undivided loyalty to your interests.
A single agent (agency) does owe you that fiduciary duty. Their obligation is to put your interests above everyone else’s, including their own. They advocate for you, negotiate aggressively for you, and keep your sensitive information confidential.
Both are legitimate. Both are common. But they’re not the same, and the form you sign on day one decides which one you’re getting.
Why Colorado Defaults to Transaction Brokers
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Most people don’t realize this, but if you walk into an open house in Colorado and start asking questions of the listing agent, you’re talking to a transaction broker by default. Colorado law presumes a brokerage relationship is “transaction” unless both parties sign paperwork creating an agency relationship.
The reason for this goes back to the 1990s when Colorado revamped its brokerage law. The idea was to clean up the confusion around who an agent actually represents. Before that, “dual agency” arrangements were common and chaotic. An agent might claim to represent both buyer and seller at once, which is basically impossible to do without conflict.
Colorado eliminated traditional dual agency. In its place, the state created the transaction broker model, where the agent is essentially a neutral facilitator who serves both sides without taking either one’s side. It works well for straightforward deals. It’s less useful when the stakes are high or the negotiation gets sharp.
Here’s the practical impact. If your agent is a transaction broker for both you and the seller (or you and the listing agent’s brokerage), they can’t tell you the seller is desperate to close before June. They can’t tell you the seller would accept a much lower offer. They can’t strategize with you the way an agent who owes you fiduciary duty would.
What a Single Agent Actually Does Differently
A single agent’s duties under Colorado law are spelled out clearly. They include loyalty, confidentiality, reasonable skill and care, disclosure of all material information, accounting of all money, and obedience to your lawful instructions.
In practice, that means a single agent representing you as a buyer can do things a transaction broker can’t. They can tell you what they would offer if they were in your shoes. They can disclose anything they learn about the seller’s situation. They can keep your maximum budget completely confidential. They can negotiate hard, even harshly, on your behalf without worrying about being “neutral.”
For sellers, a single agent does the same on the other side. They can tell you a buyer’s loan is shaky based on conversations with the listing agent. They can recommend you reject a strong offer because they sense a better one is coming. They keep your bottom-line price private even from the buyer’s agent.
This kind of representation is more common in commercial transactions and luxury residential deals. In most regular Colorado residential transactions, both sides operate as transaction brokers and the deal moves forward smoothly. Most of the time, that’s fine. Some of the time, it isn’t.
The Forms You’ll See and What They Mean
You’ll see a form called the “Brokerage Disclosure to Buyer” (BD-24) early in any home purchase. It’s not a contract. It just discloses the relationship the agent is offering. Read it before you sign anything else.
If you want a single-agent relationship, you sign the “Exclusive Right-to-Buy Listing Contract” (ETB) where the box marked “Agency” is checked. If the agent is acting as a transaction broker, that same form gets signed with “Transaction-Brokerage” checked instead.
For sellers, the equivalent form is the “Exclusive Right-to-Sell Listing Contract.” Same idea. The box you check decides whether your listing agent owes you fiduciary duty or just neutral assistance.
There’s also a third scenario worth knowing about. If your buyer’s agent ends up showing you a listing held by the same brokerage they work for (called “in-house” or “designated brokerage”), Colorado allows a “designated broker” arrangement where one agent in the firm represents the buyer and another represents the seller, with the broker-in-charge keeping them separate. It’s more honest than the old dual agency model, but it still requires careful disclosure and your written consent.
Choosing the Right Relationship for Your Situation
For most buyers and sellers, especially in straightforward transactions, transaction brokerage works fine. You get help with the paperwork, the timeline, and the logistics. The price gets negotiated through normal back-and-forth, and the deal closes.
But there are situations where I’d push hard for a single-agent relationship. If you’re a buyer in a competitive luxury segment where strategy matters, get a single agent. If you’re a seller with a property that’s hard to price or has unique issues, get a single agent. If you’re in a divorce, an estate sale, or any transaction with emotional or legal complexity, get a single agent.
The cost is usually the same. Agents who represent you as a single agent don’t typically charge more than transaction brokers do. The compensation comes from the same place (built into the deal terms), regardless of which relationship you have. What changes is what you get for it.
If your agent doesn’t bring up the choice, ask. The right question is direct: “Are you my single agent or my transaction broker?” Their answer should be specific, not evasive. If they hedge, you have your answer about what kind of representation you’d actually get.
What Out-of-State Buyers and Sellers Need to Know
If you’re moving to Colorado from a state where agency is the default (most states), this whole structure can feel unsettling at first. Texas, California, Florida, and most of the East Coast operate primarily on single-agency assumptions. The “transaction broker by default” model is genuinely a Colorado thing.
If you’re moving to Colorado from Japan or another country, the contrast is even sharper. Japanese real estate practice treats the broker as a more neutral party already, but the legal structure around fiduciary duty doesn’t translate cleanly. You should ask explicitly what type of representation you’re getting, and request agency if you want a true advocate.
Either way, the conversation to have at your first meeting is: “I want to understand exactly what kind of representation you’re offering, and I want to choose the kind that fits my situation.”
The Bottom Line
Colorado’s transaction-broker default exists for a reason, and for most home sales it works. But you have a choice, and it’s worth knowing what you’re choosing. A transaction broker helps you move the paperwork. A single agent fights for you. Different jobs, different costs of getting it wrong.
If you’re starting a Colorado purchase or sale and want to talk through which kind of representation makes sense for your situation, I’m always happy to walk through it. The choice is yours, and the right answer depends on what’s at stake for you specifically.
Prerna Kapoor | REALTOR® | Luxury Home Specialist
REAL Brokerage | 720-949-5450 | info@prernakapoor.com
CLHMS • RENE • PSA • ABR | International Sterling Society Award Winner
Prerna specializes in residential real estate across Parker, Aurora, Lone Tree, Castle Pines, Highlands Ranch, Cherry Creek, Greenwood Village, and Centennial. She speaks English, Japanese, and Hindi.
