Customer vs Client
Definition
In real estate, a client is someone to whom the agent owes fiduciary duties through an agency relationship, while a customer is a third party to whom the agent owes only honesty and fair dealing.
Example
In a seller agency relationship, the seller is the client (receiving full fiduciary duties) and the buyer is the customer (receiving honest treatment). The agent must disclose material defects to the buyer but advocates for the seller's best interests.
Exam Tip
This distinction appears frequently on exams. CLIENT = full fiduciary duties (OLD CAR). CUSTOMER = limited duties (honesty, fairness, disclosure of material facts). An agent can be held liable for lying to a customer but is not required to advocate for them.
Related Agency Terms
Agency Relationship
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
Fiduciary Duty
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
Dual Agency
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
Designated Agency
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
Transaction Brokerage
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
Agency by Estoppel
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
Frequently Asked Questions
Test Your Agency Knowledge
Practice with exam-style questions to make sure you can apply Customer vs Client and other agency concepts.