“Client” or “Customer” – What’s the difference?

October 4, 2020

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Consumers sometimes use the terms “client” and “customer” interchangeably, but there’s a big difference between the two. If you’re relatively inexperienced in buying and selling properties and you want some expert guidance and advice, I strongly recommend signing on as a client, and not as a customer.

Whether you sign a Buyer Representation Agreement (which makes you a client) or a Customer Service Agreement, your salesperson and other employees of the brokerage are required to treat you with fairness, honesty and integrity, and provide you with conscientious service.

The key distinction between the two options is that as a client, the brokerage owes you a fiduciary duty. That means the brokerage must follow your lawful instructions, promote and protect your best interests as a buyer during a real estate transaction, and refrain from sharing any information you don’t want them to disclose. Your salesperson or broker can help you prepare and negotiate an offer to seek the most advantageous terms on your behalf, refer you to other professionals, including home inspectors, and assist you in performing due diligence on a property. For example, that could mean getting your real estate lawyer to look into whether or not there are any issues with a particular property as part of their services.

As a customer, the brokerage doesn’t owe you a fiduciary duty. Your salesperson may assist you with filling out the paperwork for your offer, but you will have to come up with your own negotiation strategy to purchase the property, for instance. They have to be fair and honest, but they do not have an obligation to promote or protect your best interest.

If you’re relatively experienced in buying and selling properties you might be comfortable with accepting the customer option. However, you should be aware that it’s entirely possible that the salesperson or broker who signed you as a customer may wish to show you a property that is owned by somebody they already have signed as a client. Be aware multiple representation must be consented to in writing. When such a situation arises, ask questions and make sure you are comfortable with how it may affect the services provided to you.

So let’s say you’re interested in that property, and you want to make an offer. As a customer, you should expect that any information you share with your salesperson, such as the upper limits of your price range or your reasons for buying, will be shared with their seller client. In other words, your salesperson will help you, their customer, facilitate the purchase, but will be acting in the best interests of their client, the seller.

The Code of Ethics clearly states that loyalty ultimately rests with the client and that a broker or salesperson must protect and promote the client’s best interests. However, the Code also requires that a broker or salesperson deal fairly, honestly and with integrity and provide conscientious service to all clients and customers. You can decide to be a customer, rather than a client, but should be aware that the obligations of the brokerage will differ.

Make sure you read and understand any documents you receive from the brokerage. Think carefully about your needs, and discuss your options with your salesperson before you sign.

If you have a question about the buying or selling process, please call or email me.