One full deal simulated start to finish

Bottom line: this lesson walks one $550,000 Denver sale from the first phone call to the commission check. Learn the order. Each step has a form or a disclosure, and each dollar has a place it must sit. Colorado forms are named by title here and you should always use the current Commission-approved version.

The cast: Jordan is an associate broker working under Employing Broker Rita. His buyer client is Alex. The seller is Priya, represented by listing broker Kim at another firm.

Words you need first

A closing disclosure is the federal form giving the buyer's final loan costs. A trust account (also called escrow account) is a separate bank account where a brokerage keeps other people's money; money in it is Money Belonging to Others. A ledger tracks the money of each person in the account; a journal lists every deposit and withdrawal in time order; a reconciliation is matching your records to the bank statement. Commingling is mixing client money with your own. Payoff is the amount that clears a seller's old mortgage. Proceeds is what the seller takes home.

Step 1: the first call (Oct 12)

Alex calls Jordan. In small talk, Jordan can talk about price range and location. Before he asks for or discusses confidential information, he must give the written brokerage disclosures, which explain the working relationships (C.R.S. 12-10-408; Rule 6.5.A-B). Jordan gives Alex the Commission's brokerage disclosure form (its title is the disclosure on working relationships) and explains single agent and transaction-broker roles in plain words. Alex chooses a buyer relationship. Jordan also checks that he is not acting for more than one party without everyone knowing (C.R.S. 12-10-217(1)(e)).

Step 2: the buyer engagement contract (Oct 14)

For a residential buyer, the written agreement that hires the broker is a broker engagement contract, which has statute-set limits on prohibited terms (C.R.S. 12-10-403.5). Jordan uses his firm's buyer-broker form, writes the fee terms plainly, and discloses who pays: the seller's cooperative offer is usually the source, but the buyer may owe the difference. The identity of the payers must be disclosed before signing (C.R.S. 12-10-410(6)).

Step 3: the offer (Oct 28 to Nov 2)

Alex tours homes. Jordan gets Alex the property disclosures: the seller's property disclosure, the lead-based paint disclosure for pre-1978 homes, the water source addendum and any square-footage notice if the listing advertises square footage (Rule 6.11). He presents the offer on the Contract to Buy and Sell form, with every term itemized (Rule 6.14.A.1) and permitted changes explained (Rule 6.14.J). Counteroffers come back on the counterproposal form. Priya accepts on Nov 2. Everyone signs; Jordan keeps a signed duplicate copy of the contract for each party (C.R.S. 12-10-217(1)(j)).

Step 4: money in, on the trust trail (Nov 3 to 4)

Alex's earnest money is $11,000, 2% of the price. Alex delivers a check to Jordan on Nov 3. Jordan hands it to Rita's brokerage that day. Rule 5.7.B requires deposit into the brokerage's trust account within three business days of receipt or mutual execution, whichever is later. Rita's bookkeeper deposits it Nov 4 and makes a journal entry and a ledger entry showing Alex's name, the amount and the property address (Rule 5.14). Mixing it with the firm's own operating money would be commingling (Rule 5.10; C.R.S. 12-10-217(1)(i)).

Step 5: the contract to closing calendar (Nov 5 to Nov 30)

Jordan builds the dated calendar (see the last lesson): title commitment, HOA documents, inspection objection and resolution, appraisal, loan approval. All amendments are in writing (Rule 6.14.A.1). Seller Priya agrees to a $5,000 credit for repairs.

Step 6: closing (Nov 30)

Jordan reviews the closing documents and attends or stays reasonably available (Rule 6.19.C). The closing statements go to each client, accurate, complete and detailed (C.R.S. 12-10-217(1)(j); Rule 6.19.A). The title company is a neutral closing entity; Rita's brokerage transfers the earnest money to it and receives a dated, signed receipt (Rule 5.12.B).

Closing statement summary (example numbers)

Buyer, Alex	Amount
Purchase price	$550,000
New loan (80%)	-$440,000
Earnest money credit	-$11,000
Seller credit for repairs	-$5,000
Lender fees $4,400 + lender title policy $1,500 + prepaid items $3,100	+$9,000
Cash Alex wires at closing	$103,000

Check: $550,000 - $440,000 = $110,000; minus $11,000 = $99,000; minus $5,000 = $94,000; plus $9,000 = $103,000.

Seller, Priya	Amount
Sale price	$550,000
Payoff of old mortgage	-$290,000
Commissions: 2.5% listing side + 2.5% buyer side = 5% = $27,500	-$27,500
Repair credit to buyer	-$5,000
Title and closing fees	-$2,200
Owner's title policy	-$1,800
Net proceeds to Priya	$223,500

Check: $550,000 - $290,000 = $260,000; - $27,500 = $232,500; - $5,000 = $227,500; - $2,200 = $225,300; - $1,800 = $223,500. Fees like these vary by deal and by who pays under the contract.

Step 7: commission check and the trust-money trail

The buyer-side commission is $550,000 x 2.5% = $13,750, paid by the title company out of Priya's proceeds to Rita's brokerage (compensation may come from a seller, a buyer, a third party or a split between brokers; C.R.S. 12-10-410(1)). Rita's brokerage keeps a 10% split of $1,375 and pays Jordan $13,750 - $1,375 = $12,375. Jordan receives this only from his employing broker (C.R.S. 12-10-221).

The trust trail for Alex's $11,000: (1) Alex's check, Nov 3. (2) Trust account deposit and ledger entry, Nov 4. (3) Wired to the title company on closing day with a signed receipt. (4) Shown as a credit on Alex's closing statement. (5) Ledger balance for Alex returns to $0. The monthly reconciliation proves the bank and the journal match. If any dollar goes missing, failing to account for money or converting it is a ground for discipline (C.R.S. 12-10-217(1)(h), (i)).

Step 8: after closing

Jordan delivers the closing statements and documents to Rita's brokerage immediately after closing (Rule 6.19.A). The brokerage keeps the transaction file for four years (Rule 6.20), and the records are subject to audit by the Commission (C.R.S. 12-10-217(1)(h), (k)).

Example with real numbers

Take the commission split once more: $550,000 x 0.025 = $13,750. Brokerage 10% = $1,375. Jordan = $12,375. If Jordan also owes his team lead 5% of his share, that is $12,375 x 0.05 = $618.75, leaving $11,756.25. Whatever your office policy says, the written agreement with your employing broker governs.