Customer? Client?

One area of consumer confusion revolves around the use of the words Client and Customer in regards to a real estate transaction.  And there are some VERY important differences between the two. 

Let's start with the basics...(this applies specifically to GA, but might be true in some other states)

What is a Client?

A Client in a real estate transaction is the person that a particular agent represents.  That means the client has a written contract with the agent to represent the Client's best interests.  In essence, the agent is required to put the best interests of the client above their own.  They are also acting at the direction of the Client. There are some situations where the direction of the client might be contrary to the law... in those cases, the agent MUST follow the law.

What is a Customer?

A Customer is someone in the transaction that a particular agent doesn't represent.  While they still need to deal honestly, they are still acting at the direction of the Client.  Again, the agent always has to follow the law, but otherwise they don't work FOR the Customer, but may assist in the purchase of a property. 

Non Real Estate example...

When you go to Best Buy and are asking questions of a sales associate, they help you, but they don't work for you... they work for Best Buy and their job is to promote the interests of Best Buy.  If you were to hire a consultant to help you get the right Audio/Visual System, then you would be a Client of your consultant, and still a Customer of Best Buy. 

What does it mean?

There are some things that an agent CAN'T legally do... 

• Misrepresent the property or the condition of the property.  If they are aware of an issue, they (and the seller) MUST disclose that issue.  In fact, one could argue that if they should be aware of the issue, whether they are actually aware of it or not, it needs to be disclosed.  The only exception is obvious defects... but that is splitting hairs...  A court would be left to define "obvious defects". 
  
• Fail to present a legitimate offer.  There are a LOT of agents that can get in trouble with this.  If a buyer makes a written offer, the agent is REQUIRED to present it.  The seller can't require the agent to disregard offers that don't meet some criteria.  The seller certainly doesn't have to address the offer, but the agent must present it.  In fact, according to the Real Estate Commission, one can argue that it must be presented in the same manner as any other offer.  In essence, the listing agent can't hand the seller their chosen offers individually, and then hand them an envelope with the other offers...  they must also be presented timely... again, the court gets to decide on timeliness.  
• Steer...  and several other HUD Fair Housing related issues.  Basically, if you tell your agent that you want a house in a nice "white" neighborhood close to a Mosque and populated with loads of single people... they CAN'T use those criteria to help you search.  Race, Religion, Familial Status, Age and Sex can't be used to steer a buyer towards or away from a location.  They also can't be used as leverage to convince a seller that it is time to sell...  That is sometimes referred to as Blockbusting.
• Break any other law... like helping with mortgage fraud or lying about other offers to a cooperating agent or buyer.  Obviously the list isn't exhaustive...

Real estate agents work closely with both Clients and Customers... and often there is confusion surrounding the duties they owe to each... even among real estate agents.  I have had clients, customers AND agents ask me to do things that were illegal and/or unethical.  And sometimes those things are frustratiing for everyone involved... but the rules are the rules. 

When I have a mother with young kids ask me if the neighborhood is "kid friendly", I can't answer it.  Some argue that I can't even quote census data...  In those instances, I often tell buyers that they might want to drive around the neighborhood on a nice Saturday and see how many kids are outside playing... 

I have had potential buyers ask me how to cover for "issues" in their homes... A/C that is old or needs repair, weak or worn roof, water intrusion in the basement or ther shortcomings of the property.  If I know about it, I HAVE to disclose it.  And it is my job to have a reasonable knowledge of these issues.  I can't count how many times as a buyer's agent I have had a listing agent tell me that they don't attend inspections because they don't want to know about any defects...  I attend my seller's inspections because I feel the sellers have a right to know what is being said about their property, and they need someone to represent the property.  And I have seen some inspectors that were just plain out of line (please note, that isn't meant to slam inspectors in general).  I also want to know that the inspector being used is qualified.  I've dealt with "Inspector Dad"... and while he might be a great guy, and handy as they come, that doesn't make him an inspector. 

The Bottom Line

As a buyer or seller, you should know what duties the agent you are working with owes to you.  When you are a buyer in a new home community, the builder's agent DOESN'T REPRESENT YOU.  They might be nice, friendly and personable... but they aren't your agent.  The same holds true when you call a listing agent.  Even me.  If I am the listing agent, I represent the seller...  If you hire me to represent you (and that generally doesn't cost you a single penny), I represent you .   I caution buyers to have their own agent.  Be a Client.