William's Places

The Difference Between A Client and Consumer: A FYI

Customer John calls Agent Betty about a house. The house in question had been listed some years earlier, and is no longer on the market. Agent Betty had shown Customer John the house when it was listed, but Customer John did not buy the house at the time, and lost Agent Betty's contact information.

Customer John finds Agent Betty on ActiveRain and calls Agent Betty to see if the house is still available for sale. Agent Betty researhes the MLS and reports that the house has not been on the market in over a year. Customer John indicates a very strong desire to purchase the house in question, so agent Betty inquires into the possibility of Customer John signing a buyer-brokerage agreement, making Customer John Client John...and Customer John says "No, I don't need to sign anything right now, just find out from the owner if he/she wants to sell". Agent Betty explains to Customer John that if, 1) she contacts the owner, 2) they desire to sell, and 3) she gets the listing, then her loyalty and obligations at that point on will be to represent the best interests of the seller. Customer John says "I don't care about that right now, just find out if the owner wants to sell".

Agent Betty does her homework and discovers a history of repeated attempts to sell the house. This leads Agent Betty to believe that the owner may still be very interested in selling, but decided to wait things out. Agent Betty does her due diligence to discover all of the fats about the property, performs a complimentary CMA on the property, and, discovering no telephone information for thge owner, delivers the CMA to the address in question...

Agnet Betty gets a very pleasant surprise the next day... Owner Matthew was very interested in selling the house again, and calls Agent Betty to set up a listing appointment to discuss the CMA and get the house listed. Owner Matthew and Agent Betty sign the listing papers after their consultation, and now, Owner Matthew is the client of Agent Betty - and all of her fiduciary responsiblities (loyalty, care, obedience, disclosure, confidentiality and accounting) are now owed to Client Matthew.

Agent Betty says to Client Matthew, "There is interest in your property". Client Matthew discloses certain facts about the need to sell the property to Agent Betty, and Agent Betty keeps the information confidential in a follow-up call to Customer John to inform him that the property is now for sale. Customer John calls to inquire about the ability to assume the mortgage, and Agent Betty tells Customer John that the mortgage is unassumable.

Months pass by and no interest from Customer John is exhibited. In the meantime, the house has had plenty of interest shown, but no offers. Agent Betty contacts Customer John once again to make him aware that the property is available for sale. Customer John returns Agent Betty's call and again request to know if the mortgage can be assumed. Agent Betty had done some more research into the matter and informs Customer John that in her state, according to state statutes, mortgages are not assumable. Agent Betty does point out the possibility of alternate financing for the property due to its condition. Then the following conversation ensues:

Customer John: "What is your opinion of the price?"

Agent Betty: "Well, the price is listed at $100,000."

Customer John: "I understand that. What I want to know is, what do you think the seller will take for the house?"

Agent Betty: "Right now, the best I can do for you is advise you of what similar properties are selling for. If you wish to become my client, then I can perform a comp search to see more closely what those properties are selling for to recommend to you a price to offer."

Customer John: "What will the seller accept for the house? Why can't you answer that simple question?"

Agent Betty: "Because my obligation now is to represent the best interests of my client, the seller, I cannot disclose that information to you, as you are, at this point, not my client; if you want to change our relationship in order to get the answers you seek, then I can discuss the matter with my client once you are also a client, the buyer, in this possible transaction."

Customer John: "Well, I see that you are more interested in representing the seller than representing me, so I'll find another agent." Hangs up the phone...

Could Agent Betty have handled that situation differently? Perhaps. She could have let Customer John know that she was unable to discuss pussible acceptance prices with anyone without permission from her client. She could have offered to discuss the matter with her client first, and proceed from there. Or she could have referred Customer John to another agent in her office and collected a referral fee. But the moral of this story isn't only about Agent Betty and her actions...it is about understanding the nature of the client vs. customer relationship.

Buyers, you are a customer looking for real estate when you contact any agent to find you a property to purchase. Under that relationship, an agent is only required to disclose known material facts about a property; your interest in a property as a buyer, and provide lists of properties which meet your criteia for a house to purchase.

Buyers become  clients when you sign a Buyer-Brokerage Agreement. The agent who signs the Buyer-Brokerage agreement with you is now your agent, and owes you loyalty, obedience, care, confidentiality, accounting and disclosure in representing your interests as a buyer. In that relationship, the agent's duty to you as their client involves exercising due diligence to find the property taht you will purchase, discovering all available facts which will enable hem/her to negotiate the best possible contract for purchase on your behalf, and arranging for other players in the home-buying process to contact you in order for the process to be completed.