Buyers, Are You a Client or a Customer?

Why use a Buyer Agent?

As a home buyer, if you work with a real estate agent that has listed the property your are interested in buying, you are a "customer" but not a "client". The listing agent is working for the property owner, not you. You should have your own agent, representing you.

Here are some of the differences in the service you can expect, depending upon whether you are a "customer" or a "client".

customer vs. Client

Needs Assessment – customer

Maintain loyalty to seller’s needs. If the buyer contacts a listing agent about a listing, the agent’s duty of undivided loyalty to the seller obligates the agent to attempt to keep the buyer focused on the property the buyer called about – unless the buyer can’t afford that property or bye buyer rejects it.

Tell seller all that you learn. The listing agent’s duty of full disclosure to the seller means the agent has a duty to tell the seller all of the information learned about the buyer that might enhance the seller’s negotiating position.

Focus on the seller’s property. Because it is in the seller’s best interest for appropriate properties for a buyer to be in short supply, the listing agent should emphasize the uniqueness of the seller’s property.

Needs assessment – Client

Pay full attention to the buyer’s needs. If a buyer contacts a non-listing agent about a property, the agent can devote full attention to the buyer’s needs, including financing, motivation, timing, etc., without any obligation to match the buyer with a certain seller’s property.

Buyer can talk freely. An agent’s duty of confidentiality enables a buyer to provide information without fear of harming their negotiating position.

Suggest Alternative solutions. An agent’s duty of undivided loyalty to the buyer enables a buyer’s representative to suggest alternative solutions to the buyer’s needs, thus increasing the supply of appropriate properties to the buyer.

Property Selection – customer

Get the best offer for the seller. A seller’s agent may be limited to selecting properties for which the broker is the representative for the seller.

Limit properties to listed properties only. A listing agent who works for a buyer may be creating an undisclosed dual agency situation with that buyer. This may be a conflict of interest and a violation of state law and ethics standards.

Lower level of fiduciary responsibility to customers. A client should be given the opportunity to view new listings before customers are notified of them.

Show properties listed at a price the customer can afford. Unless a seller-client agrees otherwise, customers should only be shown properties priced within the buyer’s range of affordability, as determined by a mortgage pre-qualification or other objective measure.

Property selection – Client

Find the best property for the buyer. A buyer’s representative has access to the entire market and is not limited to properties that have been listed for sale.

“Leave no stone unturned.” A buyer’s agent can promote the buyer’s search through methods such as “Property Wanted” promotions and directly to owners of properties that may be of interest to the buyer.

First opportunity to view new listings. The duty of undivided loyalty to the buyer allows the agent to notify clients of new listings before customers are notified.

All properties are available. Property selection is not limited by the seller’s list price. A buyer may be able to negotiate the sales price down into the range of affordability.

Viewing properties – customer

Just the facts. Material facts about a property must be disclosed to the customer, but any negative aspects of the property that are not material facts must be only be address if the buyer asks about a particular aspect of the property known to the agent. No concealment is allowed.

Protect the seller. The seller’s agent cannot assist the buyer in comparing competing properties.

Viewing properties – Client

OK to give advice accompanied by the facts. The buyer’s agent can help the buyer make an objective evaluation of a property, including both positive and negative aspects of issues that are not material facts.

Educate the buyer. The buyer’s agent can help the buyer make an objective comparison of competing properties.

Negotiating for a customer

Disclose only material facts. Material facts about a property must be disclosed to the customer, but any negative aspects of the property that are not material facts must be only be address if the buyer asks about a particular aspect of the property known to the agent. No concealment is allowed.

Negotiate on behalf of the seller. Suggest strategies, tactics and techniques that will strengthen the seller’s negotiating position.

Maintain the strength of the seller’s negotiating position. Information about the seller’s negotiating position must remain confidential.

Share all information about the buyer with the seller. Information about the buyer that could aid the seller must be disclosed to the seller.

Price. Volunteer a CMA for the buyer only if it supports the seller’s listing price.

Contract. Negotiate approved clauses in the purchase agreement to protect the seller.

Financing. Suggest financing alternatives to the buyer in order to help benefit the seller’s interest.

Continue Services to the seller during negotiations. Continue to market the seller’s property during negotiations to obtain a better offer.

Negotiating for the Client

Strategize with the buyer. Plan negotiating strategy with the buyer.

Negotiate on behalf of the buyer. Suggest strategies, tactics and techniques that will strengthen the buyer’s negotiating position.

Strengthen the buyer’s negotiating position. Tell the new buyer-client about the details of past unsuccessful negotiations. Any other information about the seller (customer) that could aid the buyer’s negotiating position must be disclosed to the buyer.

Share all information with the buyer. Any other information about the seller (customer) that could aid the buyer’s negotiating position must be disclosed to the buyer.

Price. Provide price counseling for the buyer, such as information about similar properties that have sold recently.

Contract. Suggest protective clauses for the purchase agreement to safeguard the buyer.

Financing. Suggest financing alternatives that may be in the buyer’s best interests.

Continue services to the buyer during negotiations. Continue to search for other appropriate properties for the buyer to enhance the buyer’s negotiating position.

Follow-through after the purchase agreement for a customer

Endeavor to solve problems to the seller’s satisfaction. Keep parties informed of progress toward closing.

Follow-through after the purchase agreement for a Client

Endeavor to solve problems to the buyer’s satisfaction. Keep parties informed of progress toward closing.

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