RECA – Ask Charles: Customer vs Client

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A friend told me that I only have to pay fees and commissions to a real estate agent if I’m a “client,” but not if I’m a “customer.” Is this correct? And, what’s the difference?

Simply calling yourself a customer doesn’t necessarily change anything in terms of payment—the difference between being a customer or a client is in the type of working relationship you may have with a real estate professional.

The type of relationship will be recorded in your written agreement with your real estate professional and will dictate both your own and your real estate professional’s responsibilities and obligations, including payment details.

Whether you are a customer or a client of a real estate professional, they must act honestly, ensure any information they give you is correct, and exercise due care and skill at all times.

However, if you are a customer, the real estate professional is not working on your behalf to advance your interest. They can facilitate the transaction by providing you with property information and statistics, helping you fill out offers and counter offers, present those offers, and relay information back and forth, but they cannot give you advice or use their judgement to help you.

In a client relationship, the real estate professional owes you fiduciary duties, which boils down to them professional working in your best interests at all times. They will give you advice and use their professional judgement to advance your interests in a transaction.

The terms of payment, and how the professional gets paid—no matter the type of relationship you agree to—is negotiable.

In residential real estate, client relationships require you and the professional to agree to and sign a written service agreement, and RECA encourages the use of a Customer Status Acknowledgement form if you’re going to be a customer. These agreements outline any compensation. If you cannot agree on the terms of payment, you should refuse to sign the agreement and find a different real estate professional to work with.

Typically, in a client relationship, the client and the real estate professional will agree on a commission percentage to be paid to the professional upon the completion of a deal.

In a customer relationship, the real estate professional may be in a client relationship with the other party involved in the transaction, who would likely be providing the bulk of the financial remuneration. That being said, real estate professionals can certainly ask you to enter into a fee agreement, whether you sign the agreement to use their services is up to you. Make sure you fully understand any agreement you sign, as it would be legally binding.

Real estate professionals must outline the potential relationship options and any applicable payment before you sign an agreement. If you’re not happy with the agreement they present, try to negotiate. Because in the end, it doesn’t matter what you call yourself, it matters what your written service agreement says.

You’ve got questions. He’s got answers.

Charles Stevenson is the Registrar at the Real Estate Council of Alberta. Charles knows that buying and selling a home can be confusing, but it doesn’t have to be. “Ask Charles” is a question-and-answer column for consumers about buying and selling property in Alberta.

If you have a new question for Charles, please email [email protected].