Written Service Agreements - Client vs. Customer

There’s a rule change coming to how licensed real estate professionals in Alberta will be working with residential buyers.

Beginning on July 1, 2014, the Real Estate Council of Alberta will require residential real estate professionals to use written service agreements with their clients – sellers AND buyers. Written service agreements enhance consumer protection by providing greater clarity about the roles and obligations of real estate professionals, and they reduce the potential for conflicts and confusion.

The change means if you’re the client of a licensed real estate professional in Alberta, they are going to ask you to sign a written service agreement.
But what does it mean to be the “client” of a real estate professional? What’s the difference between being a “client” and being a “customer”?

A client is someone who hires a real estate professional to assist them with their real estate needs. The real estate professional must represent the client’s best interests at all times and assist them with the real estate transaction. A customer is loosely defined as a person who has contacted, but not engaged or employed, a real estate professional to provide services

When a real estate professional is working with a buyer client, the professional will represent the buyer; act solely in the buyer’s best interests; fulfill the duty of confidentiality; obey all of the client’s lawful instructions; assist with the real estate transaction; and act honestly, use reasonable care and skill, and make sure any information they provide to the buyer is correct.

On the other hand, buyers may choose to represent themselves in a purchase or sale when a real estate professional represents the other party. This could happen when a buyer visits a newly built home and there is a real estate professional selling it on behalf of the builder. In this case, that buyer will have a customer relationship with the real estate professional. The real estate professional can’t give that buyer the services they give when providing representation, but they can provide services that help complete the transaction.

For example, they may agree to give the buyer statistics or the names of appraisers, mortgage brokers, or other service providers. They may also help the buyer complete standard forms. When a real estate professional works with a buyer as a customer, they have a responsibility to act honestly, use reasonable care and skill, and make sure any information they give is correct – but they do not act in that buyer’s best interests.

Practically, what does the distinction between “client” and “customer” mean for a buyer of residential property in Alberta?

I just want to go see a couple of houses, do I have to sign anything?

A lot will depend on how much information you provide to the real estate professional before viewing homes. If or when you start providing confidential information, such as needs, motivation or financial qualification, to the professional, he or she needs to clarify your working relationship – to find out if you want to be treated as a client or a customer. If you want to be a client, and have that professional represent you, you will need to have a written buyer representation agreement; the term of that agreement is negotiable. You could even sign a one-day agreement.

The requirement for a written service agreement won’t be triggered simply by visiting an open house, small talk about housing price ranges or property styles, or when a real state professional simply responds to general, factual questions from a buyer or a seller.

Make sure before you start providing confidential information to a real estate professional, you clarify your working relationship and determine whether you want to be a client or a customer.If you want to be a customer, you won’t have to sign an agreement – but you also won’t have the real estate professional representing you and working in your best interests.

The Real Estate Council of Alberta is the independent governing authority that sets, regulates and enforces standards for real estate, mortgage brokerage, property management and real estate appraisal professionals in Alberta. For more information about written service agreements, the Real Estate Council of Alberta or Alberta’s real estate industry, please contact a licensed real estate professional or visit www.reca.ca.