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Are You a Client or a Customer?

The Tucson real estate industry sometimes uses language that appears at first glance to be clear, but do you as a consumer know what some terms really mean? At first glance, the words client and customer seem pretty clear-cut, but they mean completely different things to a Tucson realtor. It also means a tremendous difference in how seriously you are taken as a luxury home buyer.

Think we're splitting hairs? The words client and customer and the way they relate to the Tucson realtor as individuals make a tremendous difference in the types and level of service you receive as a luxury home buyer. After you read why, you'll know absolutely whether you want to be one or the other.

First, let's start with a little history. A Tucson realtor have always worked with home sellers to list their homes for sale on the market. Along with this service comes the responsibility to advertise the homes, network with other another Tucson realtor to find a buyer, negotiate the sales contract and guide the sellers to successful closings. Because of the time and expenses incurred by the Tucson agent and broker, which will not be reimbursed until the closing of the luxury home, sellers have always been required to sign a listing contract. This contract enables the Tucson agent/broker enough time to properly market the luxury home, find a buyer, negotiate a contract and get the property to closing within the time frame allowed. It also protects the Tucson agent from home owners who wish to use services without compensating the professional.

The real benefit, however, is for the Tucson home owner. Once the home owner has signed the contract, the Tucson agent/broker has the fiduciary responsibility to get the highest price possible for the luxury home and to protect the seller's interests above all else. The Tucson agent also must follow Arizona state mandated regulations as to ethics and legalities that are enforceable by Arizona state councils in conjunction with the local Tucson realtor associations. In other words, the contract is legally binding, with the Tucson real estate agent's performance at stake.

Now that a contract has been signed, the luxury home owner is the client of the Tucson agent/broker, and enjoys the full privileges of a close, working relationship.

Luxury home buyers have historically worked with Tucson real estate agents, too, but it wasn't until fairly recently that they have been asked to sign buyer's representation agreements. This is a change that has come about because of two reasons: abuse to luxury home buyer's agents and increased consumer awareness.

Without a contract, the luxury home buyer's agent was particularly vulnerable to working without getting paid. Too often, home buyers would ask them to show them Tucson home after home, and then buy from another Tucson real estate agent. One favorite buyer trick is to attend Tucson homes open houses without their real estate agent and tell the listing agent they aren't working with anyone. Buyers mistakenly believe that they are learning about more luxury homes without a Tucson real estate agent at their side, or that they may possibly get a better deal. The truth is - they don't. They usually pay more for the luxury home than they have to when they buy from the Tucson listing agent directly.

Then consumer awareness dawned. Luxury home buyers began to realize that whoever represented them at the closing table was on the side of the seller, not theirs. They realized that they deserved to have a true advocate, and the Tucson buyer's agent was born. The only way was to create a binding agreement that protects both parties.

Good Tucson real estate agents didn't want to be burned again. So the luxury home buyer's representation agreement was created. Again, it was a protection for the Tucson agents, but it generates much more benefit for the luxury home buyer. The main advantage is that releases the Tucson agent from a fiduciary responsibility to the seller and enables the agent to pursue the buyer's goals without any other agenda.

Once the contract is signed, the Tucson real estate agent goes into motion searching the MLS for homes, and seeking luxury homes through other avenues - foreclosures, FSBOs, and REOs. At negotiations, the contracted buyer's agent becomes a bulldog for the buyer, unrestricted by the seller or seller's agent. Now they can make more demands, get a better price and better terms of sale for the home buyer.

Despite these advantages, some Tucson home buyers are still reluctant to sign. They don't want to be "tied down" or they may mistakenly think that getting several Tucson real estate agents to work with them will get them a better luxury home or deal. They won't. Part of the strength of the industry is the Tucson agent communication network. A buyer working several Tucson agents will quickly become a joke. Without a contract, the home buyer is clearly not a client. He or she is a customer. And when a good luxury home listing comes on the market either by word of mouth, e-mail from another Tucson agent, or on the MLS, do you think the home buyer's agent will notify first? The uncommitted home buyer (customer) or the contracted buyer (client?)

A contract makes a difference in other ways. For example, there are things the homes seller may not want disclosed to the home buyer such as their urgency to sell, which could compromise their bargaining position. A Tucson real estate agent who then discloses this information is in ethical violation and can be brought before the Arizona state review board on charges. Some offenses are serious enough to have licensure to practice revoked.

But the luxury homes buyer has no such protections without a contract. Anything they say to an uncontracted Tucson real estate agent may be passed along to the home seller. Why? Because, any Tucson real estate agent who works for the home buyer without a contract automatically becomes a sub-agent for the Tucson listing agent, and is therefore working on behalf of the home seller.

Surprised? It's all spelled out - in the listing contract and in the buyer's representation agreement.
A contract makes the difference in whether you are a customer or a client in the Tucson real estate transaction. Which do you want to be?

Written by Blanche Evans

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