Are you a customer or a client?

When you choose to work with a real estate licensee, he or she may or may not be "your" agent. An agent owes certain duties to a client but has a different obligation to a customer. You must know whether you are a customer or a client in a real estate transaction, and it is your decision as to how you will work with the licensee. 

You should discuss the following information with the real estate licensee with whom you are working in order to make an informed decision.

Who is a customer?
A customer is a person who seeks to purchase real estate, but who has NOT established an agency relationship and is NOT represented by an agent. 

A customer can expect the salesperson to provide honest information but cannot expect the salesperson to act as an agent or to negotiate the best price in a purchase. A real estate licensee is also obligated by law to treat customers honestly, to disclose known material facts about the property, and to promptly present all offers to the seller. 

As a buyer, you may decide you don't need your own agent. The seller's agent may be able to provide you with all the information you require to buy real property without your being represented by your own agent; however, if you are a customer, the licensee's primary loyalty is not to you. It is to his or her client. The agent must convey all known information to his or her client, such as your urgency to move or your willingness to increase your offer. Keep this in mind when visiting open houses or calling on advertisements - beware what you say to the agent present and keep in mind they MUST tell this information to the Seller!


Who is a client?
A client is a person who establishes an agency relationship with and agrees to be represented by an agent in a real estate transaction. 

A seller becomes a client of a real estate company by signing a listing agreement with a licensee associated with a company. This agreement must be in writing and must clearly establish the obligations of both the buyer and the agent. 

A buyer becomes a client of a real estate company by requesting through a licensee that the company be the buyer's agent. Such an arrangement must be in writing and clearly establish the obligations of both the buyer and the agent. There are required disclosures and contracts involved in this relationship that must be signed.


Who is an agent?
An agent is the licensee who, at your direction, acts for and represents you, above all others, as his or her client. In Minnesota, once an agency relationship is created, the broker considered to be the agent of the client, and all licensees within the company become sub-agents of the broker representing the same client. 

Acting on your behalf, an agent in a real estate transaction will negotiate the best price and terms for you. An agent owes utmost loyalty to you, the client, and must convey to you any information he or she knows which might influence your decision to buy or sell. 

The real estate agent is normally paid by the seller; however, in certain circumstances a buyer may be required to pay the agent's commission. How the agent is being paid and how much must be disclosed and agreed to in writing.


What is a dual agent?
In certain circumstances, which should be explained to you by the licensee, an agent may represent the buyer and seller in the same transaction provided each has consented in writing prior to the transaction. This arrangement is called dual agency since one agent represents both parties and both remain clients of the company. This is a common practice in our market. 

There are important considerations for buyers and sellers in regard to dual agency:

  • "Motivational" information is kept confidential
    Buyers and sellers may share motivational information with their real estate sales associate. This could include information on price, terms and their reason for buying or selling a home. In a proper dual agency situation, this information will be kept confidential. Confidentiality prevents either party from having a negotiating advantage.
  • Buyers and sellers get equal representation from all associates
    All of the sales associates involved in the transaction owe an equal level of representation to the buyers and sellers. All information will be shared with both parties with the exception of the final price or terms either party will agree to, their motivation for making those decisions, or if specific information is designated confidential by either party in writing.
  • Buyers and sellers will get advice on negotiation options and potential outcomes
    The broker will advise the buyer as to negotiation options as well as the future ramifications of those decisions. Advice may take place prior to or during the presentation, negotiation and acceptance of an offer to purchase.


Do you want to be a customer or a client?
Do you want to receive services (customer) or be represented (client)? If you are not sure, discuss your options with us, or request the free report "Buyer's Agents: Why Every Homebuyer Needs One". It is your choice and you need to decide whether you will hire an agent or be self-represented. At your discretion, it may be advisable for you to obtain legal or other professional advice in connection with a transaction. It is your ongoing responsibility to protect your own interest. 

To see the actual text of the Agency Relationships in Real Estate Transactions that is used by Realtors in Minnesota, please email us and we will be happy to email or send it to you.