colorado real estate commission rules 2019-2021

If you're already a real estate agent, then I know of no better way to invest than to look into real estate deals.  You have the deal flow, time, money, and most importantly industry expertise to evaluate and cherry pick profitable deals.  You should place your money into some nice commercial properties that you can manage or co-invest with others.  You know as well as anyone how to parlay $200K into a $1M deal and get $40K annual returns.  Do that a few times and you're financially independent.  In that case, why retire?  Just keep doing more deals.

The question includes an incorrect assumption that foreclosed homes (REO's) sell for less money, and therefore result in smaller commissions. Two problems with this logic:Homebuyers usually buy as much home as their banker tells them they can afford. As such if they are approved for a $300,000 home they'll spend $300,000. If foreclosures actually sold at a discount, the buyer would spend the same amount but get a better home - good for home buyer and good for agent (or at least the same).Most people believe REO's sell at a discount because of poor analysis that is continually repeated in the press. One particular foreclosure data provider has pushed the idea that foreclosures sell at big discounts. The problem is that they are comparing the median price of market sales, to the median price of foreclosure sales. That's akin to comparing the average price of used Mercedes to the average price of used Hondas and telling the world that used Honda's can be purchased for a big discount. The banks just aren't foreclosing on higher end homes as fast as low end homes. So a high percentage of foreclosure sales are on low end homes. At the same time a far greater percentage of market sales are high end homes. Even when you do see what appears to be a discount on an REO sale it is usually because the property has deferred maintenance and is in need of repairs. That's an opportunity for sweat equity, but not a discount.If real estate agents occasionally show reluctance to show a foreclosed home, it may be because they know you as a buyer aren't in a position to both come up with a down payment and make the repairs REOs often require. In some instances it may also be because they've had some bad experiences working with lenders and their agents, and a few may even feel its beneath them. Still with as much as 50% of sales being on distressed properties, the vast majority of agents are more than willing to help you buy any home you want, foreclosure or not.

Here you go? Real Estate Broker Steps for Initial Licensure

Mashvisor recently had an interview with Joe Mivshek, a real estate agent at Keller Williams Realty who’s been living in Colorado for 30 years. In this interview, Mivshek states that Colorado is still a very hot seller’s market. Over the past 3 years appreciation has been 7-11% per year, depending on the areas. Many records have been shattered like the average home price is now over 400k.Colorado has the lowest unemployment rate in the country at 3% compared to a national average of 4.1%, which is a main driver of the housing market and an important factor in real estate investing. The Colorado real estate market is still booming in terms of both residential and commercial real estate properties. Population is increasing, as Colorado gained 70k people in 2021?According to Mivshek, if interest rates climb slowly, we’ll switch to an even market (neither a buyer’s market nor a seller’s market) in 18-24 months, but no one sees downturn since the unemployment rate is so low. Real estate investors are advised to look for both short term and long term rental options. If an investment is priced high, look at the short term/vacation rental market. If you find a home that can be rented long term with a 6% or better cap rate, that’s the way to go. You’ll get great rental income and long term appreciation on both options.If you’re interested in reading the full interview, read: The Colorado Real Estate Market 2021. Interview with Expert Joe Mivshek

Every state is different, but normally your looking at 3 to 3.5% which is than split among agent and broker. If no broker is involved and you are the broker, you keep the whole commission. Seller negotiates the commission with the selling agent (usually 6–8%). Selling agent negotiates with buyers agents (which is 50% of the 6–8%). Buyers typically don’t pay anything to the agents in this transaction.

Commissions were always negotiable between the principal and real estate agent, way before the MLS came along.Indeed, back in the day, commissions were often higher as it was quite difficult to complete a sale transaction. With the lower prices and tons of legwork involved, the listing real estate broker would command between 7–10% commissions on a sale. Since the concept of a buyer’s broker wasn't well developed, the listing real estate broker would handle the entire transaction, mostly for the benefit of the seller, who paid the commission fees. The buyers were left to their own devices.This is still very much how it works in commercial real estate.Eventually, residential home buyers sought to get some better advice for themselves to avoid being scammed by the listing real estate brokers. Starting in the 1960s and 1970s, new regulations came along to force additional disclosures to be provided to buyers and new rules of ethics were created to stop all the egregious violations of public trust like steering and blockbusting. No doubt the rising demand for government money for home financing through the major agencies had something to do with that.With the rise of the real estate buyer agents, buyers had more say and confidence in the purchase transaction. Given all the work that the buyer’s agent did, they demanded a commission split from the listing real estate broker. While this split is also negotiable, the rise of the MLS stabilized it at around 50/50 to ensure that buyers were comfortable that their agents were paid enough to work hard on their behalf.The MLS also opened up much more competition to the real estate professional market and that drove down the asking commission rates to about the 6% range. There it stabilized as ever increasing numbers of government regulations about the real estate transaction poured in, all in the guise of trying to protect home buyers from fraud. Well, all those protections had a time and effort cost. You can either be safe or get a cheaper deal, not both. Most choose to be safe.As for your ancillary questions:If there was no MLS and agents didn’t have to share commissions, wouldn’t commissions be cut in half?The MLS is just a marketing tool. Without it, there would still need to be agents involved to put together deals. The only way to save on commissions is to do a deal directly with the listing real estate broker and having the buyer take his chances. Even then, the listing real estate broker is unlikely to welcome the additional litigation risk and would need to bring in another broker to represent the buyer. Hence, commissions wouldn't be cut in half. Now, if the buyer is as competent as a professional real estate broker, then he can negotiate the commission discounts accordingly. There's nothing to prevent that from happening, even now.In some countries (UK) commissions are half what they are in the U.S. and you get highly qualified agents. Why are we forced to pay for two agents and two brokers here?This is simply the free market at work. It's the same as comparing health care costs between the U.K. and the US. Until there's a structural change that reduces the number of regulations and litigation risk, the cost structure today will remain for both. It's simply what the market has determined is necessary to do the job. As it is, abut 80% of new real estate brokers and subagents are out of the business in five years. They just don't make enough to survive. The average income for real estate agents is about $25K, much lower than the median income in the US, around $33.6K.And, nobody is forcing the buyer to pay two agents and two brokers here. That just doesn't happen. Indeed, the buyer DOESN’T pay for any broker or agent. The seller hires a real estate broker to list and market the property, paying the full commission to get the result, whoever is involved. Obviously, during negotiations, the broker’s split may come into play, so regardless of how many people are involved in the transaction, the total commission paid may be reduced.If the coop commission were offered directly to buyers instead of to their brokers, wouldn’t there be more do it yourself home buyers saving lots of money as a result?Maybe and maybe not. Again, a competent buyer who can negotiate toe to toe with the listing agent can always bring the coop commission into the deal as a result. Why doesn't this happen more often? Simply, most buyers are way out of their depths when it comes to negotiations, the ever changing landscape of regulations, and all the legal nuances required to complete a successful transaction. Real estate brokers are constantly playing catchup with whatever new requirements come out from the Federal, state, and local governments, each one a potential new legal land mine. It's hardly something to be risked when you're living in such a litigious country.Bottomline, all the technology changes will have minimal impact on overall real estate commissions. The only way to make a meaningful reduction in the cost of the real estate transaction is to reduce the number of protections in place. Currently, we are headed squarely in the opposite direction, at least until the Orange clown in the White House and the crazy doctor leading HUD gets to work, if ever.

You’ll need to complete your real estate classes, just like any other state. If you’ve already passed your national exam in another state, then you should be able to skip it here in Colorado.Getting your Colorado real estate agent’s license (here in Colorado, the official title is “associate broker”) is harder than other states when it comes to passing the state exam.I had my license in Arizona (which provides agents a lot of legal power, which requires a lot of understanding about AZ real estate law) and Texas (where closings require real estate attorneys to review and approve paperwork, so there was less legal demands on agents) - and both states‡ exam content and requirements were definitely easier.Based on the latest passing rates (May 2019), only 63% of the people taking the exam the first time passed it. And that’s an increase from past years, where it was somewhere around 50%. That’s an intimidating passing rate for aspiring “associate brokers”, which means that many of them weren’t ready for the exam.The moral of the story is this: do your homework and find one of the best real estate school in Colorado to do your prep work. Don’t fall into the trap of “hey, I can save a couple of bucks, so I’ll go with the cheapest school” strategy.Go with a school that is up-to-date on current laws and requirements and requires a lot from their students. Otherwise, you will be rudely surprised when you take the exam and see questions on material that were either not covered enough in your classes, or, worse yet, not covered at all.(Yes, I speak from experience, although I did pass the exam the first time - only because I had a solid knowledge from other states and of real estate law and principles in general.)The Colorado Division of Real Estate provides a great resource - they prthe stats on where students went to school and then their total passing rates on the first try of taking the exam.Check out this page: Real Estate Broker Steps for Initial Licensure and selectReal Estate Broker Course Provider First Time Exam Pass RateAdditionally, there is a book you can purchase: Principles of Real Estate Practice Textbook. It’s definitely worth the money, especially when you’re preparing for the exam. That book ultimately saved me from getting close to failing the exam as it covered areas that my classes neglected to cover.Lastly, there are people in Colorado who do tutoring and exam prep classes that are not associated with a particular school. I would definitely recommend one of these people and their services - especially when it comes to the point where you need to choose which broker you want to work with.Be aware that the expenses of getting and maintaining your real estate agent’s license in Colorado is higher than other states. State fees, class fees, mandatory E&O insurance, CE fees, etc. all add up for over $1500 to start. And that doesn’t include what your broker will require you to pay in office fees, technology fees, etc.When it comes to brokers, that’s an even more important conversation . . . your choice depends on how committed you are, how much money you have in starting your career here, how much mentorship you need, and what services you want. And with the highly competitive sellers‡ market in Colorado, it’s extremely critical to have a powerful marketing plan in place once you get started. Otherwise, it will be a painful, expensive business venture.

It depends on circumstances and contract agreements, but here are the generalities.First, let me make clear the difference between a real estate broker and real estate agent, as the terms are often used interchangeably. In the hierarchy, the broker is the person actually responsible for the business. Agents are just what it sounds like - they represent the broker and work as his or her agent to facilitate a deal. Some brokers, who do not wish to run an office, and supervise agents, will work under another broker as an agent. Now let's get down to commisions.First, there are no "fixed" commision rates. In most areas, you may negotiate with a broker or agent for the commision rate. Once a rate is agreed on, and the property is listed, commission is divided in the following ways:1. If the brokerage that lists the property also obtains the buyer, that brokerage keeps the entire commission. If another brokerage brings the buyer, the commission is split 50-50 between brokerages.2. The brokers share the commision with their agents. The agents and the broker work under an agreement as to how much of the commision the broker keeps and how much the agent keeps. In general, new, less experienced agents and their brokers split the broker's commision 50-50. Those agents who are top performers usually make better deal with ther broker. 70 percent to the agent is fairly common. The very best agents, often those who have their own teams and support staff, may make 90 percent of the broker's commision. Some companies allow agents to keep all of the commision after achievIng a very high level of sales during a year.3. Agents are not employees of the broker in most cases. Agents are independent contractors, and are responsible for their own business expenses, taxes, and licencing and fees. Fee include membership in the local MLS service, and usually some amount paid to the broker for their "desk space", use of facilities, printing costs, etc. Agents often pay for other things such as newspaper ads and internet. All this varies by company and brokerage.4. So, let's look at an example:A home sells for $200,000.00, and the agreed on commision from the seller, is 5%. The total commision is $10,000.00. Assuming the listing and buyers brokerage are different, each brokerage gets $5,000.00. If the agents for the brokerages have a 50-50 split, the agent gets $2,500.00. Sometimes, there are some minor processing fees the agent covers, perhaps $100.00. That's then $2,400.00 the agent.If the agent who listed the property also brings the buyer, the broker gets the whole $10,000.00, and at a 50-50 split, the agenr gets $5,000.00 minus fees.5. The holy grail for agents is to list properties. Even if another brokerage's agency brings a buyer, the listing agent gets a piece of the deal. The most successful agents are generally the best listers.Real estate agents do a great deal of work behind the scenes. All sorts of paperwork, permits, negotions, and services are performed. There in no paycheck for deals not completed.

It depends on several things including your target audience, current market condition and competition. Typical response rate from distressed homeowners is 1–2% but you may need to mail to them 5–6 times before that response rate is reached.Adam - We Buy Houses Fast in Dallas