Real Estate Council of Alberta Fundamentals Practice Exam

What distinguishes a customer from a client in real estate?

1. Clients receive confidential advice

2. Customers have a legal contract with the agent

3. Clients are not entitled to representation

4. Customers must pay a fee for services

The correct answer is: Clients receive confidential advice

In real estate, the distinction between a customer and a client primarily revolves around the level of service and the nature of the relationship established with the real estate professional. A client is someone who has entered into an agency relationship with the agent, which involves a formal agreement that outlines the services provided, as well as the responsibilities and duties of the agent towards the client. One of the key aspects of this relationship is the obligation for the agent to provide confidential advice and guidance, protecting the client’s interests fully. This confidentiality means that any information shared by the client is kept secret from potential buyers or sellers, ensuring the client can make informed decisions without worrying about compromising their position in negotiations. In contrast, customers do not have the same level of relationship with the agent; they receive limited service, with no legal obligation on the agent to act in their best interests or keep their information confidential. This lack of a formalized relationship means that customers generally do not benefit from the fiduciary responsibilities that agents owe to their clients, which includes loyalty, full disclosure, and the duty to maintain confidentiality. Understanding this fundamental difference helps clarify the varying levels of support and representation available in real estate transactions, which can significantly impact the outcomes for individuals involved in buying or selling property.