Understanding the Difference Between Customer and Client Relationships in Real Estate Transactions

Understanding the Difference Between Customer and Client Relationships in Real Estate Transactions

What document does a public Buyer/Seller sign to become a Customer? Do I need to include Buyer & Seller contact information on the Signature Page of a Contract? If an agent is working with a Buyer/Seller as a Customer may I just by-pass the agent & contact that person directly? The following is a synopsis of the latest episode of “Real Estate Made Crystal Clear” with our very own Dana Sparks. You can watch the video in its entirety below.

As a real estate agent, it’s essential to understand the difference between customer and client relationships in transactions involving public persons. In this blog, we’ll cover the critical differences between these two relationships and how they impact your responsibilities and obligations.

The Difference Between Customers and Clients

By default, in Georgia, a public person working with you and your broker to buy or sell real estate is your customer. There’s nothing required by license law for them to sign to establish or create the customer relationship. However, if they want to be your client, then Georgia law requires them to sign a document that creates the client relationship. Under this law, a broker cannot represent a buyer or a seller as a client without first entering into a written agreement. The distinction between customer and client relationships in Georgia is contractually driven and based on Georgia law. As an agent, if a public person chooses to work with you and your broker without signing a seller brokerage agreement or buyer brokerage agreement, they are your customer. As a customer, you may perform ministerial acts as opposed to a fiduciary relationship with your client.

Ministerial Acts vs. Fiduciary Responsibility

Ministerial acts are acts related to real estate brokerage activities that do not require the discretion or the exercise of the licensee’s judgment. You do not need a real estate license to perform a ministerial act. However, you must still be open and honest and perform customer service-related activities, such as identifying vendors that a buyer or seller might choose to work with, like inspectors, lenders, closing attorneys, home warranty companies, among others. If the public person is your client, you have a fiduciary responsibility, which means you have the highest level of confidence or trust from your client regarding a particular transaction or financial affairs. The definition of fiduciary is different in real estate because, by virtue of having a real estate license issued to you by the State of Georgia, you don’t have the same type of relationship that a public person has with an attorney in terms of confidentiality.

Understanding Georgia License Law

If you are working with a public person as a customer, there’s nothing in Georgia law that requires them to sign anything to become a customer. However, your broker may have a policy on that, and it’s essential to make sure your public customer signs a document that describes the customer relationship. The seller appropriate agreement and the buyer brokerage agreement create the client relationship, but there are customer acknowledgments that describe the customer relationship.

In conclusion, it’s vital to understand the distinction between customer and client relationships in real estate transactions. While customers do not have the same level of protection and fiduciary responsibility as clients, agents must still be open, honest, and perform customer service-related activities. Additionally, it’s essential to have a written document that describes the customer relationship between your broker and your public customer.

Watch the entire video for more information here:




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