How are a client and a customer different in real estate terms?

• A. The client is the principal represented by the agent; the customer is a third party not represented.
• B. The client is always the broker.
• C. The customer is the principal.
• D. The client is a third party not represented.

Answer: (A)

In real estate, who the agent represents drives what duties they owe. The client is the principal who hires the agent and is represented by them, with fiduciary duties such as loyalty, confidentiality, obedience to the client’s instructions (within the law), disclosure of material information, accounting for funds, and exercising reasonable care. The client’s interests take priority because the agent has a duty to advocate for that client in the transaction.

The customer, on the other hand, is a third party who may be assisted by the agent but is not represented. The agent’s duties to a customer are more limited: they must deal honestly and fairly, provide available information, and avoid misrepresentation, but they do not owe the fiduciary obligations that exist with a client. The customer doesn’t have the agent’s advocacy; that obligation remains with the client they represent.

A practical takeaway: when you sign an agency agreement, you become the agent’s client and gain representation and fiduciary protection. If you’re only interacting with the agent as a non-represented party, you’re a customer.