Are you a customer or a client? Do you know the difference?

By
Real Estate Agent with Keller Williams Realty Coeur d'Alene AB37665

Janna Rankin Scharf, GRI, CLHMS, SFR - Coeur d'Alene Idaho Real Estate Agent

As a Realtor, I work with both customers and clientsDo you know the difference? 

Customer or ClientI am a real estate agent when I'm working for my clients.  I am a non-agent when working with my customers.  The difference is whether or not you and I have entered into a written agreement for agency representation.

Typically, sellers enter into a written agency agreement with the signing of the listing agreement.  There are exceptions, but not often.  Almost always, a listing agent is actually that, an agent of the seller.

On the other hand, buyers tend to be more inclined to remain customers as they work with a Realtor to buy a house.  A buyer agency agreement will transform you from customer to client status.  I don't believe any buyer who understood agency would proceed without it.

The biggest difference to you, between being my client or my customer, are some very important obligations I am held accountable to, under state law.  When I am your agent and you are my client, we have a fiduciary relationship and I am legally held to a higher standard of conduct. 

State license law defines the terms of our customer and client relationships - 

When you are my customer I am required to:

  • Perform necessary and customary acts to assist you in the purchase or sale of real estate
  • Perform these acts in good faith and with honest and reasonable care
  • Properly account for money or other property you place in the licensee's care
  • Disclose adverse material facts which are, or should be, within the licensee's knowledge

    As a customer, your brokerage will not act as your agent and is not required to promote your best interests or keep your bargaining information confidential.  If you use the services of a brokerage without a written agreement, you will remain a customer.

When you are my client, the points above apply, along with these addition obligations:

If you choose to sign a representation agreement, you will become a Client.  The brokerage and its licensees must act as your Agent.  They will owe you the following duties in addition to the basic Customer level services required of all licensees:

  • Perform the terms of your agency agreement with skill and care
  • Promote your best interests in good faith, honesty, and fair dealing
  • Maintain the confidentiality of some client information, including bargaining information, even after the representation has ended.

In a nutshell, as your agent, I am required to work for you with skill and care.  I like to think that I operate that way with everyone, but I'm not required to by law!  If you are my customer, I only need to exercise reasonable care, not skill.  This always makes me smile.

I am also now required to promote your best interest.  This means I am obligated to seek the best possible outcome for YOU, no matter what.  I am not the referee of the transaction, I am your coach, trying to win the toss, get the home team advantage, point out fouls of the other team, get the extra seconds added back to the clock.  I am legally bound to promote YOUR best interest! 

What the confidentiality of the bargaining information means to you is that I cannot tell the other side of the transaction that you would pay more than our offer, or take less than you're asking.  Or anything else that has to do with your motivation.  On the other hand, if I know anything about the motivation of the other party which would be in your best interest to know, I am obligated to pass that information to you.

(Now having explained this, you can clearly see the disadvantage to a buyer who is working with the seller's listing agent to purchase a property.)

Specific duties owed by a real estate brokerage and its licensees to Idaho consumers are defined by the "Idaho Real Estate Brokerage Representation Act." Idaho Code Section 54-2082, et seq. 

Posted by

Janna Rankin Scharf provides a superior level of real estate service to home buyers and sellers in Coeur d'Alene and Kootenai County, Idaho. Visit www.JannaScharf.com for area information and to search for all homes in the Coeur d'Alene Multiple Listing Service. 

No matter how grand or modest your real estate dreams may be, you can turn to me in confidence.  Give me a call today so I can  be of service to you!

Janna Rankin Scharf AB, GRI, CLHMS, PMN, SFR  208.651.9700

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Re-Blogged 11 times:

Re-Blogged By Re-Blogged At
  1. Susan Morrison 09/03/2011 02:17 AM
  2. Erica Ramus 09/03/2011 03:02 AM
  3. Amanda Howard 09/03/2011 03:32 AM
  4. Barbara Todaro 09/03/2011 11:26 AM
  5. Eileen Burns 09/04/2011 04:03 AM
  6. Valerie Black 09/04/2011 05:55 AM
  7. Doug Patterson 09/04/2011 06:35 AM
  8. Maria Salvaggio 09/04/2011 09:22 AM
  9. Valentina Balint-Jones 09/04/2011 04:02 PM
  10. Phil Leng 09/06/2011 01:57 AM
  11. Dinny Evans 09/06/2011 04:22 PM
Topic:
Home Buying
Location:
Idaho
Groups:
Realtors®
Keller Williams 'Rainers
Spokane, Eastern Washington & North Idaho Real Estate Network
Local Expert
30 Days In September 2011 Localism Posting Challenge
Tags:
agency

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Janna Scharf
Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID
Coeur d'Alene Idaho Real Estate Expert

Wow, I am blown away by the thoughtful discussion that followed this simple post!  OF COURSE, there is much more to agency than I touched on in my post.  Here in Idaho, we have to have the discussion at our first contact of substance, which I ALWAYS do.  (Not doing this, and having the signature on the brochure in the file, is the #1 offense in Idaho Real Estate Commission audits)  Thank you all for your insightful input.  I would also like to add that I, too, have no problem representing my sellers as an agent while acting as a non-agent for a buyer (which is how my broker prefers it) or acting as an agent for my buyer when buying a FSBO where I am a non-agent for the seller.  The point is, we need to understand the ethical standards and make sure everyone understands our relationship with them. 

Sep 05, 2011 07:36 AM #101
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Jacqueline Drake CRS
Jacqueline Drake Realty - Saint David, AZ
Southeast Arizona land, farms & horse properties

This is a very interesting topic particularly when the differences between the states are pointed out. I obtained my license in 1971 when everyone represented the seller as agent or sub agent and watched the changes over the years. Prior to the advent of buyer representation I don't believe a number of agents working with buyers worked as though the represented the sellers. That was largely because they got to know the buyers, their kids and their pets names by the time they wrote an offer on a house owned by a seller the agent didn't know.

I have a large number of listings and work with buyers who contact me about them. I normally represent only the seller and they are my client. I am fair and honest with the buyers who are my customers and most of them are very pleased and we often become friends. I have sold my listings to past clients and worked as a dual agent in those situations where I didn't have a choice. I don't ask buyers to sign buyer/broker agreements primarily because I would not sign one with someone I just met. I have lost very few buyers over the years. This works for me since I have created buyer loyalty by my diligence and knowledge of the area. I think we all need to work within the laws of our state and within our own comfort zone.

Jacqueline Drake CRS

Sep 05, 2011 07:58 AM #102
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Jim McCormack
Nashville Short Sale Specialist - Jim McCormack - Edge Advantage Realty, LLC - 615-784-EDGE (3343) - Murfreesboro, TN
Nashville Short Sale REALTOR - Stop Foreclosure

Good points.

Sep 05, 2011 08:08 AM #103
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Brad Hornshaw
Brad Hornshaw Realtor Lynnwood, Bothell, Everett - Lynnwood, WA
Realtor, Listing Agent, Buyers Agent, Investments

Hi Janna

I love this post. Although I am still a relatively new agent in my 2nd year I am finding out those who are squeemish about signing a Buyers agency end up being a waste of time and those who will are far more seriouse and ready........Brad

Sep 05, 2011 08:22 AM #104
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1 ~Judi & Don Barrett & Chassy Eastep - Integrity
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
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Janna, You did an excellent job of explaining the difference for your customers/clients/readers.  Oklahoma does not have "agents". Agency law for real estate was replaced with a transaction broker law.  But we still have clients and customers. 

Sep 05, 2011 09:09 AM #105
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Gerard Gilbers
Higher Authority Markeing - Asheboro, NC
Your Marketing Master

Great article, yes we are taught the difference as part of prelicense class. If they don't sign on the line they are not your client and can go to anyone they want.

Sep 05, 2011 10:24 AM #106
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George Lawson
Moreno Valley, CA

Great post, Jana! You have describing the difference very well, and I intend to include some of your points in future discussions with prospective clients. While the idea of agency and fiduciary responsibilities varies from state to state, the focus remains the same ... representing our client's interests in the very best possible way. I have found that most "customers" prefer to become "clients" when the benefits of doing so are explained well.

Sep 05, 2011 01:58 PM #107
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Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Great post and I have never had it explained that way before.  Thanks for the information.

Sep 05, 2011 02:02 PM #108
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Mary Sheridan
Keller Willliams - 1033 Hamilton Place,Johnson City TN 37604 - Johnson City, TN
Creative Marketing, Buyer Agency 423-943-7655

This is very similar to what I've used since the mid 80s when I started representing buyers and most of the local companies (Maryland at that time) told me we'd never get away with it.     How times have changed. 

Your location, Cour d Alene, ID, brings back memories.   We honeymooned in a fire tower in the St. Joe National Forest many, many years ago, working for the Forest Service after college.   Beautiful country.  

Sep 05, 2011 02:12 PM #109
Rainmaker
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Phil Leng
Retired - Kirkland, WA
Phil Leng - Retired

Hi Janna,

You don't need any more comments, but here is one anyway.

Well presented! There is a difference, and buyers need to know the difference!

Phil

Sep 06, 2011 01:52 AM #110
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Janna,

It is interesting that you start looking at semantic. Because then you first sentence "

"As a Realtor, I work with both customers and clientsDo you know the difference? " is very wrong. As a Realtor, you are a Member of NAR. Working with customers and clients - you are a real estate licensee, an agent or a broker.

I called the attorney for the Florida  Association of Realtors and asked them whether there is a difference in terms customers and clients.

No, not in Florida. They can be used as synonyms. By the way, in Florida, unless we choose another form of representation, we are by default transaction brokers, and do not offer the full scope of fiduciary to our customers/clients.

So, how you use it (at least in Florida) is up to you. If you like them, call them clients, and if you don't, call them customers. Thee is no science behind it

Sep 06, 2011 02:45 AM #111
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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Janna,

And one more thing that I missed in the comment. You say " I don't believe any buyer who understood agency would proceed without it."

I do not understand why the buyer needs it. I can still understand why the agents need it (to be paid), but why the Buyer needs it? To limit his/her ability to shop, to change brokers?

Maybe we do not understand it, but so many even agents do not use it, me included. Actually, the only people who use it that I know, I read on AR. Never heard of a local agent who uses Buyer Broker Agreement. the closest I know is Broker Bryant in Orlando area

Sep 06, 2011 02:50 AM #112
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Mike & Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

To #114, if an attorney at FAR told you there is no difference between a client and a customer, they gave you bum advice.

Your statement  that you do not understand why a buyer needs "agency" only confirms  that you do not understand:

agency, fiduciary, florida law or what agent resonsibilities are....catch up before you get yourself in trouble.

 

Eve in Orlando

Sep 06, 2011 04:50 AM #113
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Billy Jalbert
The Maui Real Estate Team, Inc. - Paia, HI

Excellent post and topic. There are differences in agency laws in each state, however, I would submit that confusion still reigns when it comes to agency industry wide.  I think this is unfortunate and an issue where NAR is missing the boat on leadership and professionalism.  As long as the public (and many Realtors) remain confused and ignorant regarding agency, we will continue to have a perception problem.

Sep 06, 2011 10:30 AM #114
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Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

An excellent post and more buyers need to understand these differences.  Rarely will an agent work without a listing agreement.. however, agents often work without a buyer agency agreement.

Sep 06, 2011 04:01 PM #115
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Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

This is a great post.  Srevice and a longstanding relationship versus a transactional transaction!

Sep 06, 2011 04:26 PM #116
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Yvette Chisholm
Long & Foster Real Estate, Inc. - Rockville, MD
Associate Broker - Rockville, MD 301-758-9500

Great post and great conversation from everyone.   Most agents are afraid to present the required disclosures forms in Maryland.   It is easy for me.   It is the law.

Sep 06, 2011 04:26 PM #117
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

@Larry (119). Not sure how you came with the statement that, let's say in Georgia, or in California it will all be about "Srevice and a longstanding relationship " and n Florida & Colorado (where the transaction brokerage is the default representation) is bad?

I am sorry, it depends not a freaking piece of paper, but on the people who work. Paper does not make you more efficient, or more honest and the percentage of bad agents would still be pretty much the same in any state.

I find it amusing that agent would look at the piece of paper and based on that decide whether to work half-a$$ or be in the buyer's (or seller's) corner.

 

Sep 06, 2011 05:49 PM #118
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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@Eve (116),

No, she did not give me the advice, and I did not say that.

What she said was that there is legally no difference, and I would love to see that law or ruling where the legal distinction is made relating to our profession.

Sep 06, 2011 05:54 PM #119
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Gene Donohue
Only Way Realty / UpstateHomeSeller.com - Greenville, SC
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Thank you Janna!  As someone new to Real Estate (I'm currently a property manager but I'm starting my realestate license class next week), you have explained very well the difference.  Not sure where my Real Estate path is going to go but if I become a Buyers Agent I'll be sure to work with Clients!

 

Gene Donohue, Upstate Properties Group

Sep 07, 2011 05:19 AM #120
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