In the world of New York City real estate, there are specific terms used to categorize individuals involved in the buying or selling process: client, customer, and prospect. These terms may seem interchangeable at first glance, but they hold distinct meanings and implications within the industry. In this blog post, we will delve into the differences between a consumer being a client, customer, or prospect in the context of New York real estate.
Client
The person(s) or entity(ies) with whom a REALTOR® or a REALTOR®’s firm has an agency or legally recognized non-agency relationship. In other words, a client is a buyer or seller who has established a formal agency relationship with a real estate agent or broker. This relationship is typically documented through a legally binding agreement, such as a Buyer’s Representation Agreement or a Listing Agreement.
Key characteristics of a Client:
a. Exclusive Representation: A client enjoys exclusive representation from their chosen agent or broker. This means that the agent is obligated to act in the client’s best interest throughout the transaction.
b. Fiduciary Duty: Agents owe their clients a fiduciary duty, which includes loyalty, confidentiality, full disclosure, and the duty to negotiate the best possible terms on their behalf.
c. Access to Market Expertise: Clients benefit from their agent’s knowledge and expertise in the New York real estate market, including access to off-market listings and personalized advice.
d. Fee Arrangement: Clients typically have a fee arrangement where the agent is compensated through a commission, often paid by the seller in residential transactions.
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Customer
A party to a real estate transaction who receives information, services, or benefits but has no contractual relationship with the REALTOR® or the REALTOR®’s firm. A customer in New York real estate refers to an individual who engages with a real estate agent but has not established a formal agency relationship through a written agreement. Customers may seek an agent’s assistance with property inquiries, viewings, or general market information without committing to exclusive representation.
Key characteristics of a Customer:
a. No Exclusive Representation: Unlike clients, customers do not receive exclusive representation. The agent does not have a legal obligation to prioritize the customer’s interests above others.
b. Limited Fiduciary Duties: While agents should still act ethically and professionally with customers, their fiduciary duties are not as extensive as they are with clients.
c. Flexibility: Customers have the flexibility to work with multiple agents simultaneously, which can be beneficial when exploring a wide range of properties.
d. Potential Dual Agency: If a customer decides to make an offer on a property represented by their agent, a situation known as dual agency may arise. In this scenario, the agent must navigate conflicts of interest carefully.
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Prospect
A purchaser, seller, tenant, or landlord who is not subject to a representation relationship with the REALTOR® or REALTOR®’s firm. A prospect is an individual who has expressed interest in the real estate market but has not yet engaged with a real estate agent or entered the buying or selling process. Prospects are in the early stages of exploring their options and may be browsing listings, attending open houses, or conducting preliminary research.
Key characteristics of a Prospect:
a. No Formal Relationship: Prospects have no formal relationship with a real estate agent or broker.
b. Limited Assistance: They may receive general information from listing websites, attend open houses, or inquire about properties from listing agents, but they do not have dedicated representation.
c. Potential for Future Engagement: Prospects may eventually become customers or clients if they decide to work with an agent in the future.
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Agent
A real estate licensee (including brokers and sales associates) acting in an agency relationship as defined by state law or regulation
Broker
A real estate licensee (including brokers and sales associates) acting as an agent or in a legally recognized non-agency capacity
It’s important to know these definitions because they help you to determine the types of duties you are owed from an agent or broker. For example, you are owed more as a client than you are as a prospect. In the complex world of NYC real estate, understanding the distinctions between being a client, customer, or prospect is crucial. Each category comes with its own set of rights, responsibilities, and implications for both consumers and real estate professionals. Whether you’re considering buying or selling property in Queens or New York City, knowing where you stand in these categories can help you navigate the local real estate market with confidence and clarity. Need Help? Contact Us 🙂
