Why is the distinction between a client and a customer important in real estate?

The distinction between a client and a customer is foundational in real estate, primarily because the duties and responsibilities owed to each differ significantly. In real estate practice, a client is someone who has entered into a formal agency relationship with a broker, which entails a higher level of service and fiduciary duty. This means that agents owe clients specific duties, such as loyalty, full disclosure, obedience, confidentiality, and accounting, among others.

On the other hand, a customer is someone who engages in a transaction with the agent but does not have a formal agency relationship. The agent's responsibilities to a customer are limited mainly to providing factual information and fair treatment, rather than the extensive fiduciary duties owed to a client.

Understanding this distinction is critical because it informs how agents should conduct themselves and the level of care they must exercise in their dealings. Agents must navigate these relationships carefully, ensuring they meet the obligations of their role while protecting the interests of their clients. This differentiation influences how agents manage their interactions and the legal implications that arise from those relationships.