Don’t let the NAR settlement proposition steer you off course – knowing and articulating your value as a professional has never been more important.

The terms “client” and “customer” are often used to distinguish the nature of the relationship between a real estate professional (agent or broker) and an individual needing their services.

Client

A client is someone who has entered into a formal relationship with a real estate agent or broker. This typically involves signing a representation agreement, such as a buyer’s agreement or a listing agreement.

In a client relationship, the real estate professional owes the client a fiduciary duty, which includes loyalty, confidentiality, full disclosure, obedience, and reasonable care and diligence.

The agent works in the best interests of the client, negotiating on their behalf, and providing guidance throughout the real estate transaction.

Customer

A customer, on the other hand, is someone who receives services from a real estate professional without a formal relationship. They might be working with an agent, but the agent does not owe them the same fiduciary duties as they would to a client.

While an agent can provide valuable information and assistance to a customer, they are not obligated to act solely in the customer’s best interest.

The commission lawsuits: potential legal implications

Commission Disputes: In cases where there is a dispute over commissions, the nature of the relationship (client vs. customer) may impact the legal arguments. Agents typically earn commissions from transactions with clients they represent, and disputes may arise if the level of representation is unclear or if there’s a disagreement over the terms of the representation agreement.

Fiduciary Duty: Legal actions might also involve fiduciary duty. If an agent is accused of breaching their fiduciary duty to a client, it could lead to legal consequences, including lawsuits. Customers, not having the same fiduciary relationship, may have a different legal standing in such disputes.

It’s essential for both real estate professionals and consumers to have a clear understanding of the type of relationship established and the associated duties and obligations. Legal outcomes can be influenced by the specific details of each case, and consulting with a legal professional for advice on individual situations is recommended.