The terms client and customer are largely interchangeable in our daily lives. Client sounds fancy and customer is somewhat more pedestrian. In a boutique shop, a clerk may say “our clients demand the best quality” while in another shop you may be told, “I’m just finishing up with a customer and will be right with you”. This interchangeability has bred confusion among consumers about what these terms are intended to mean and the implications that follow in a real estate context. Let’s take a few minutes to work out some key thoughts on this issue.
Words Matter
One thing that has been lost in our video-crazed society is that words matter. What words you choose to communicate to another person have a real effect on their perception, understanding, and gravity of the idea communicated. Anyone who tells you words simply don’t matter will need words to tell you that and should pause for the irony. In real estate, the words chosen when relating to a consumer as either customer or client have weight and even legal import. Make a habit of using the correct term to keep your role clear. The term client is only reserved for those consumers who have entered into a service agreement, generally a written service agreement for the provision of real estate services. This service agreement will include some level of obligation upon the brokerage and its associates often with a full package of legal fiduciary duties owed to that consumer for a period of time. The term customer on the other hand is used for everyone else who has not engaged the services of a brokerage but only contacted them for some real estate purpose or information generally.
Know Your Role
There is a huge benefit in recognizing the role of a REALTOR® in any consumer interactions regarding real estate. Where you have a client seller for example and the buyer contacts you about the seller’s property, a pause to check your role is helpful to remember your fiduciary duties are owed only to your client and not to the customer who has placed the call. Your obligation is to guard the client relationship with zeal and professionalism promoting your client's best interest first and exclusively. To the customer you must be honest, and act with professionalism and integrity, ensuring that any information you provide to the customer is accurate… that’s it. In fact, so stark is the difference between client and customer the regulator insists that if at any point in such a conversation that the consumer unwittingly begins to discuss information that could be considered personal or confidential, you must stop them and explain agency relationships to them using the Consumer Relationships Guide produced by the regulator.
Who Would Choose Customer Status
If client relationships are superior in their provision of services and protection of the consumer in a real estate transaction, why would anyone choose customer status? A valid question but there are times when it can make sense. Where a seller has chosen to exercise their right to sell their property themselves without the help of a brokerage, but a REALTOR® has a buyer client for that property, the seller must disclose the nature of their choice and how the REALTOR® will be zealously promoting only the interests of their buyer client in the transaction. This should be done by reviewing the Consumer Relationships Guide with them, and the use of a written Customer Status Acknowledgement form which the seller signs to ensure they understand the role of the brokerage positioned against them. Additionally, in a situation where a property is listed with a brokerage and a buyer believes they have the experience and knowledge to negotiate and manage the transaction themselves without the help of a REALTOR®, they too would need to be disclosed the risks, the role of the brokerage, and acknowledge they understand by the same method mentioned above.
Additional Considerations
Customer status should generally be thought of as the rare exception in the options of real estate relationships for two key reasons. First, it is unusual for a consumer to choose customer status, being fully informed of their choice to divest themselves of the protections afforded them through a client relationship, and their position of disadvantage when up against a party who does have the representation of a REALTOR®. Convenience is never a good motive to suggest such a thing to a consumer, but instead, a fulsome transparent understanding of their choice is required. Second, the customer status option is a REALTOR® trap. REALTORS® are nice people and want to help, it’s what we do, however where someone is in a customer relationship, the customer must know you cannot give advice or judgment at all since advising a customer could negate your customer status with them and create an implied agency relationship. For example, if the customer asks, “should I ask for the freezer in the basement” you should answer “I can’t answer that, do you want to ask for the freezer in the basement?”. Keeping the relationship as a customer relationship takes work against the natural intuition of the REALTOR® and should be managed carefully.
Specialty brokerage models notwithstanding, customer status should be thought of as a tool available in the toolbox, but one of those weird specialty tools you use rarely unless you are doing a special project. When discussing agency relationships, the key job is to ensure the consumer is fully informed so they can make the choice that best matches their understanding of what they expect. Most conflicts arise because a consumer's understanding of the relationship does not match the paperwork they signed resulting in unmet expectations and frustration. Once the relationship forms as either a client or a customer, work hard to ensure you abide by the obligations and prohibitions required of the different relationships.