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When is a Buyer your client?

By Adam Bogle

Real Estate Agent with TEN Realty Group

February 20, 2008 09:16 AM

One of the interesting questions in real estate is when is a buyer your client?

When they call you on the phone the first time?
When they sit at your desk?
When they get in your car?
When they look at a house?
When they look at 20 houses?
When they write an offer?
When the offer gets accepted?
When the deal closes?

For a lot of agents, it is somewhere around step 5 or 6.

Most agents would agree that it is definitely by step 6, but what are you doing for steps 1-5? Acting like they are your client.

A buyer is not your client until you sign a contract, or a buyer's service contract with them.

Until then, you are just acting like they are your client.

I do not work with a buyer as an agent until they have signed a buyers service agreement with me. It is discussed usually by step 2, and signed by step 4. People who won't sign it are just wasting your time.

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Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

You hit a sore spot Adam. Everytime I hear someone use the word "client" for prospective customer, I want to scream. "They are not your client". They are not yet even a customer. They are merely a consumer. Be careful what you say.

Makes no difference. I believe that many licensees just like he word client. My client. I sometimes think they beleive they're an attorney on "Law & Order".

Feb 20, 2008 09:25 AM

Johnny Huang

Pleasant Hill, CA

Insurance and Real Estate Broker

Some would argue they are your clients when you create agency. Getting into your car is a form of creating agency where they put their trust in your hands, literally.

I've learned my lesson, per my blog on Rookie Mistake #1. Before you go show homes, sign here!

Feb 20, 2008 09:33 AM

Darci Gullett

RE/MAX Platinum - Fowlerville, MI

Adam, I have to agree with you they are a client when you sign a contract. But I try to treat all calls with client care.

Lenn, is there a rule that only attorneys can call there people clients?

Darci Gullett-Livingston County Michigan

Feb 20, 2008 09:34 AM

Adam Bogle

TEN Realty Group - Ashland, OR

CRS, Southern Oregon... The Most Recognized Realto

Definition of the word Client.

Websters English Dictionary:

2 a: a person who engages the professional advice or services of another

Random House

1.	a person or group that uses the professional advice or services of a lawyer, accountant, advertising agency, architect, etc.

American Heritage Dictionary

The party for which professional services are rendered, as by an attorney

I consider myself a professional. When does an attorney or accountant consider one a client? When they are working for them for compensation (unless they like pro bono work).

As a professional, I consider people for whom I work for compensation, clients.

I consider people who I may at some time in the future possibly work for, for compensation, prospects.

Definition of the word Customer:

Random House

1.	a person who purchases goods or services from another; buyer; patron.

I'm not going to bother to look this up in more dictionarys.

But by using the work customer over client, it sounds to me like you are selling items, like cars......

By using the word client, you are selling professional services.

Feb 20, 2008 09:54 AM

Michael Setunsky

Woodbridge, VA

Your Commercial Real Estate Link to Northern VA

A client relationship is determined by the law of Agency. A person is a Customer until such time that an agency relationship is developed with a signed Listing Agreement or a Buyer Broker Agreement. In other words the person you represent is your Client and the person you don't represent is your Customer.

I have to caveat my statement by saying this is the law of Agency as it applies to the State of Virginia where I am licensed. Other States may have different laws as it applies to Agency or developing a Client relationship.

Feb 20, 2008 11:52 AM

Adam Bogle

TEN Realty Group - Ashland, OR

CRS, Southern Oregon... The Most Recognized Realto

I agree totally with your definition Michael.

In the above arguement, at what point is that agency relationship developed. I appears to be a case by case basis if you ask me. And the Agent, and customer/client could have a different opinion about when that was.

There was a lawsuit somewhere in the US where there was a guy in a McDonalds who was a regular customer. The place was robbed, the customer chased the guy down the street, the robber was hurt, and sued McDonalds (gotta love the courts, eh?) He won, because the court said he acted as an agent for McDonalds, whether or not he was an employee, or not.....

My essential arguement, and I want to pursue this in the state of Oregon, is to require the buyers service contract in the same way we have lisitng contracts. That solves the question of when the agency relationship is started.

Feb 20, 2008 12:11 PM

Krista L. Walker

RE/MAX Platinum Medford - Medford, OR

Oregon- Homes & Real Estate for Sale

It is my understanding that although you should have a contract to memorializes your agreed upon agency duties and commitments, if you act like a duck, you are a duck. In Oregon, this could happen in step 1 or 2. That is why it is so important to have a contract because otherwise you have assumed duties you may or may not want.

Feb 20, 2008 02:21 PM

Adam Bogle

TEN Realty Group - Ashland, OR

CRS, Southern Oregon... The Most Recognized Realto

Oregon

Duck

That's Funny!!!!

Feb 20, 2008 03:07 PM

Michael Setunsky

Woodbridge, VA

Your Commercial Real Estate Link to Northern VA

Krista, you are absolutely right. Your analogy, "If it quacks like a duck and looks like a duck, it must be a duck" applies in my State of Virginia. It's called Implied Agency or Ostensible Agency. You can turn your Customer into a Client just by your words or actions and possiblly not even know it.

Feb 20, 2008 11:18 PM

Michael Setunsky

Woodbridge, VA

Your Commercial Real Estate Link to Northern VA

Adam, it could happen at any point. Again I can only speak to the Agency laws in Virginia. We are required to provide what are called Ministerial Acts to our Customers. Acts which do require judgement or discretion on our part. The minute a Customer asks a question that requires an answer where the Agent must use judgement or discretion, that Customer becomes a Client. This is where Implied Agency comes in. Your words or actions can create a Agency relationship.

Feb 20, 2008 11:27 PM

Adam Bogle

TEN Realty Group - Ashland, OR

CRS, Southern Oregon... The Most Recognized Realto

The laws in Virginia and the laws in Oregon are pretty much the same here. And I do understand that clients can become customers at most any time in my original list.

What I am attempting to demonstrate with the debate is that we should use the buyers service contract, so there is no question as to when acting like a duck, makes you a duck.

I ask my customers (boy I don't like that word in this context), my prospects to sign the buyers service agreement either before, or by the time they do ask such a question where we become a duck.

If I am going to be a duck, I want to know I'm a duck.

And I believe the laws in Oregon, and Virginia for that matter, need to be looked into, so as not to have this vague time frame where you, the Realtor, could be a duck in the minds of your client, and not know it.

Or, that the customer thinks your a beaver, and you think your a duck.

Feb 21, 2008 02:15 AM

Michael Setunsky

Woodbridge, VA

Your Commercial Real Estate Link to Northern VA

Adam, going on the assumption that Oregon's Buyers Service Contract and Virginia'a Buyer Broker Agreement are similar in that they establish a contractual Agency relationship between the Client and Broker, there is no question as to Client representation. I agree, you should get your ducks in line up front so everyone knows where they stand as to Client representation.

Feb 21, 2008 04:01 AM