Client vs. Customer

By: realestateprofessional.news

Clarifying representation and fiduciary duties post NAR’s settlement proposal.

The terms “client” and “customer” hold significant weight in real estate, defining the nuanced dynamics between a real estate professional (agent or broker) and those seeking their services.

Client

A client represents an individual who has formally engaged in a contractual relationship with a real estate agent or broker. This typically involves the execution of a representation agreement, such as a buyer’s agreement or a listing agreement.

Within a client relationship, the real estate professional is bound by a fiduciary duty to the client. This encompasses loyalty, confidentiality, full disclosure, obedience, and a commitment to exercising reasonable care and diligence.

Acting in the best interests of the client, the agent navigates negotiations on their behalf and furnishes guidance throughout the real estate transaction.

Customer

Conversely, a customer refers to someone who receives services from a real estate professional without a formalized relationship. While they may engage with an agent, the agent is not bound by the same fiduciary obligations as they would be to a client.

While agents may offer valuable insights and assistance to customers, they are not obliged to prioritize the customer’s interests above all else.

The Legal Lens: Implications of Commission Disputes

Commission Disputes: Disagreements over commissions may hinge on the nature of the relationship (client versus customer) and can have significant legal ramifications. Typically, agents earn commissions from transactions involving clients they represent, and disputes may arise if the extent of representation is ambiguous or if there’s contention regarding the terms of the representation agreement.

Fiduciary Duty: Legal entanglements may also revolve around breaches of fiduciary duty. Allegations of such breaches by an agent towards a client can result in legal repercussions, including litigation. Customers, lacking the same fiduciary relationship, may find themselves in a different legal standing within such disputes.

It is imperative for both real estate professionals and consumers alike to understand the nuances of the relationship established and the associated duties and responsibilities. Legal outcomes are dependent on the specifics of each case, and requesting counsel from legal experts for tailored advice is recommended.

If you are interested in selling real estate, please allow Target Auction Company the opportunity to detail the benefits of our auction platform and provide you with a free consultation. We can offer the information and advice needed to make a sound decision regarding the sale of your property. We can be reached by email, at 1-800-476-3939 or visit www.TargetAuction.com.