When you are “just” a customer vs. a client
Claudia Stallings the age of the home, and perhaps what other homes have sold for in the same area. As a “customer,” you are entitled to any material disclosures about the home. What you cannot receive as a “customer,” is the Realtor’s opinion, insight, advice, and guidance, and you cannot be guaranteed that your information will remain confidential. If you want this from a Realtor, then you must become a “client.” The “client” relationship is developed only if you sign a listing agreement, or a buyer representation agreement with a Realtor. Once you become a “client,” then your agent now owes you fiduciary duties. These include obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care and diligence. Now you have formed a connection with someone whose responsibility is to put your interests before those of any other party. Penalties for breaching these fiduciary duties are quite severe for agents, and include forfeiture of commission, cost for any actual and punitive damages that may have occurred, and loss of their real estate license. With this much at stake, you can almost be guaranteed that the agent will fulfill their duties. The cost of representation varies and is negotiable. Many buyers will get in the car with a Realtor, and go see house after house, and never sign a buyer’s representative agreement with that licensee until they find a house on which they want to make an offer. It is in the buyer’s best interest to sign this agreement before going house hunting, to be guaranteed that you will receive the guidance you desire from the agent you’ve selected. It also puts the Realtor in a position of being able to explain paperwork, pricing, financing, disclosures, and to offer advice throughout the decision-making process.
When sellers list a property with their agent, they enter a client relationship by signing the listing agreement. However, if their agent is approached by buyers who want to buy the house, and everyone agrees to it, then the agent can become a “facilitator,” who can pull the deal together, but who does not officially represent either party.
A study conducted by the Federal Trade Commission (FTC) of buyers and sellers back in 1983 found that the public’s perception regarding agency relationships was not, in fact, reality. Nearly 71 percent of buyers thought that the seller’s agent who was showing them a property was “their” agent. 73 percent of buyers told the agent confidential information, including the final price they would pay for the property. Because of these statistics, agents must disclose who they represent in transactions.
When buying or selling, you have your and your family’s best interest in mind. By signing a representation agreement, you can ensure that your agent is also responsible for your best interest. Sometimes, customer service is just not enough.