What is the difference between a customer and client?

Buyers and sellers may enter into one of two types of agreements with a brokerage: a representation agreement or a customer service agreement. Both are considered legally binding agreements.

If a person enters into a representation agreement, they are considered a client of the brokerage; if a person enters into a customer service agreement, they are considered a customer.

There are two big differences between the brokerage’s obligations to a client versus a customer.

First, if a person is a client, the brokerage has an important obligation to them, called fiduciary duty, and must promote and protect their best interests in the real estate transaction. If a person is a customer, the brokerage does not have that obligation, but is obligated to treat them with fairness, honesty and integrity, and to provide them with conscientious and competent service.

Second, if a person is a client looking to purchase a property, under a legislated Code of Ethics, the salesperson must take reasonable steps to determine, and then disclose to them, all material facts about the property. If they are a customer, however, the salesperson only has to disclose the material facts that he or she already knows or ought to know, and they are not required to take any further steps.