Client vs. Customer Relationship: Which One Are You In with Your Agent?

Alyssa Dotson
February 19, 2016

In today’s real estate market, we are seeing more buyers purchasing a home without the assistance of their own designated agent to represent their interests. These buyers are opting to go directly to the listing agent under the misconception that they will be able to secure a better deal and have higher bidding priority. Additionally, these buyers assume that the listing agent and sellers may cut the commission being charged since only one agent will be involved in the transaction, so they’ll get the home cheaper. However, for the most part, this is certainly not the case.

When a buyer goes directly to the listing agent, that listing agent has two options. The agent can enter into a “limited dual agency” agreement, in which they give limited representation to both buyer and seller (with both parties’ consent). Or they can enter a customer relationship agreement, where no representation is given. Since limited dual agency relationships are far less common today than they have been in the past, I will focus this article on the differences between client (designated agent) and customer relationships.

So what’s the difference between a client relationship and a customer relationship agreement? Let me explain.

In a client relationship, a designated agent is appointed to represent a seller or a buyer in a real estate transaction and is bound by ethics and the law to be thorough and honest while providing representation. Your designated agent must:

  1. provide undivided loyalty to the client at all times while protecting the client's negotiating position, and disclose all known facts that may influence the the client’s decisions;
  2. act within the parameters you set as a client, and obey your lawful instructions to act on your behalf;
  3. maintain your confidentiality including financial, personal and legal; and
  4. exercise reasonable care and skill while performing task and executing duties.

On the other hand, in a customer relationship you are, perhaps unknowingly, entering your transaction with no representation. This happens when you have signed a customer relationship agreement directly with a selling agent, or when purchasing a new development or pre-sale at a sales centre. You are declining your right to have a designated agent act on your behalf. 

In this type of relationship, the agent is not allowed to suggest a purchase price, negotiate on your behalf, inform you of their client’s bottom-line price, or disclose any confidential information to you. 

They may, however, do the following:

  1. Explain real estate terms, forms and practices.
  2. Assist in setting up appointments to view properties.
  3. Prepare and present all offers at your instruction.
  4. Inform you of mortgage providers and their policies.
  5. Describe and give estimates on cost pertaining to your transaction.

It is so important to do your research before diving into the complexities of purchasing property. If this isn’t your first time testing the waters and you feel comfortable with and have knowledge of the limitations of the customer relationship, then it is completely up to if you enter into one.

However, especially for first-time home buyers, investing into the BC real estate market can be intimidating and you’ll want to make sure you have all the professional help you can get – especially since your own designated agent doesn’t come at a cost to you. As such, a client relationship is the route you will want to take.

Buyer beware! Without representation you may have no recourse towards the agent preparing your paperwork, as you have assumed the liability and risk.

Alyssa Dotson
Alyssa Dotson of Alyssa Dotson Real Estate Team is a top-sales-award-winning REALTOR® for Sutton Group, West Coast Realty. With 13 years of experience as a Realtor, Alyssa has proudly served many sellers and home buyers in the Greater Vancouver and Fraser Valley regions.