CO Real Estate common mistakes
CO Real Estate · Understand the traps and how to avoid them.
In a scenario where one broker lists a home and also writes the buyer's offer, the candidate selects 'dual agency' or 'designated agency' as the Colorado working relationship.
Pre-licensing prep material and other states' vocabulary teach dual agency as the normal answer whenever both sides are represented, so the candidate pattern-matches on the fact pattern instead of on Colorado's statutory categories.
What to do instead
Memorize that Colorado recognizes only two working relationships: single agent (agent of the seller/landlord or of the buyer/tenant) and transaction-broker (not an agent of either party). No dual agency and no subagency. When no written agency agreement exists, or when a broker works both sides, the role is transaction-broker who still owes honesty, disclosure of adverse material facts, accounting for money, and reasonable skill and care.
Places a buyer's earnest money check into the brokerage's business operating account, then writes the refund or the commission out of that same account.
The candidate thinks of earnest money as brokerage revenue and of the trust account as optional paperwork, because the exam's arithmetic questions about commissions blur the line between money held for others and money earned.
What to do instead
Any money held on behalf of another party goes into a designated trust account and is disbursed only as the contract directs. Commissions move from trust to operating only once earned under the engagement/listing contract. Keep a separate ledger per transaction, reconcile the trust account monthly (book balance vs. bank balance vs. sum of client ledgers), and retain the records for the period the Commission requires so they can be produced on audit.
Has the buyer sign the buyer agency agreement before ever delivering the Commission-approved Disclosure of Relationship and explanation of brokerage duties, and treats the disclosure as satisfied by the signed contract.
Candidates equate 'disclosure' with 'contract' and assume the paperwork signed at the end of the transaction covers the disclosure obligation, which is tested by timing questions rather than content questions.
What to do instead
Deliver and explain the Disclosure of Relationship at the first substantive contact, before the consumer reveals confidential information, and get written confirmation of the relationship chosen. Remember the disclosure is required even when the outcome is transaction-broker, and that the buyer agency/listing agreement must be in writing, signed, and have a definite termination date.
Computes a tax or rent proration by taking the annual figure divided by 365, then charging the buyer for the days up to and including closing without checking the convention the question supplies.
The candidate freezes on the arithmetic and grabs the first formula recalled, losing track of who owned the property on which days and whether the closing day belongs to seller or buyer.
What to do instead
Write the rule on scratch paper before calculating: daily rate equals annual amount divided by days in the year (or 12 equal months when the item calls for a 30-day month), seller is charged for every day of seller ownership through the day of closing unless the question states otherwise, and every proration is a debit to one party and a credit to the other. Sanity-check the sign and size of the result before selecting.
Counts the acceptance date as Day 1 when calculating the inspection, title review, loan, or appraisal deadlines on the Colorado Contract to Buy and Sell.
Calendar counting feels intuitive and most people count the starting day as day one, so the candidate lands one day late (or early) on every deadline question without noticing.
What to do instead
Use the contract's own convention: the date of acceptance is Day 0, and deadlines run in calendar days from there, with time is of the essence. Practice converting a stated acceptance date into three or four specific 'Day X' dates and identify which party must act and what notice form is used if a deadline is missed.
Answers a question about a ditch, stream, or well serving a rural Colorado parcel by saying the landowner has riparian rights to the water because the water touches the property.
Riparian doctrine dominates general real estate textbooks and eastern-state exam prep, so the candidate applies it by default and never reaches the Colorado-specific doctrine being tested.
What to do instead
State the rule first: Colorado follows prior appropriation, not riparian rights. Water is a separate property right acquired by beneficial use and confirmed by decree, priority is first in time first in right, and land adjacency alone gives no right to divert or consume water. Mention that a well or ditch right must be examined in the title work like any other interest in land.
Says the Closing Disclosure may be handed to the borrower at the closing table, or that the Loan Estimate is delivered a few days before closing.
The two federal disclosures are learned as a pair and get swapped under time pressure, and the candidate forgets that the numbers tested are business days counted backward from consummation.
What to do instead
Anchor each form to its moment: Loan Estimate within three business days of application, Closing Disclosure at least three business days before consummation. Also fix in mind that Colorado residential closings are typically handled by a title company rather than an attorney, so the settlement agent questions follow title-company practice, not attorney-state practice.
Concludes that a seller who knows about a leaky basement or a prior flood has no duty to say anything because the buyer was free to inspect.
Caveat emptor is a familiar phrase, and candidates apply it as a blanket rule instead of the narrower Colorado framework built on the Seller's Property Disclosure plus a common-law duty to disclose known adverse material facts.
What to do instead
Separate the two duties: the Seller's Property Disclosure form applies to most residential resales (with listed exemptions such as certain new construction and foreclosure/REO transfers), and independently the seller and the seller's broker must disclose known adverse material facts that are not discoverable by reasonable inspection. An exemption from the form does not license concealment, and pre-1978 housing also triggers the federal lead-based paint disclosure and pamphlet.
Uses the county assessor's actual value for a property as the market value in a comparative market analysis or appraisal question, or adjusts comparables by applying a single price-per-square-foot figure.
The assessor's number is the only dollar figure a candidate has seen attached to a property, and single-line price-per-square-foot math feels efficient, so both shortcuts substitute for the definitional work the question is actually testing.
What to do instead
Define market value as the most probable price between a willing, informed buyer and seller, neither under duress, with the property exposed to the market for a reasonable time. Treat assessed value as a tax roll figure that may lag the market. Adjust each comparable for differences in location, size, condition, and features, and state highest and best use before choosing a value.
Tells a tenant the security deposit must be returned within 30 days no matter what the lease says, and describes the return as a single check with no itemization.
The rule is usually memorized as a bare number without the lease-dependent extension or the written itemization requirement, so any variation in the fact pattern knocks out the correct answer.
What to do instead
Recall the full Colorado rule: the deposit is returned within one month unless the lease provides a longer period (up to 60 days), and the return must include a written statement itemizing any deductions; it is sent to the tenant's last known address, and a forwarding address should be requested at move-out so the deadline is not missed.