Ted and Lisa are selling their home and have signed a listing agreement.

Question: Client or customer?

Scenario: Steven visits Ted and Lisa's open house, and he is interested in purchasing their home. What happens next? Is Steven a client or customer?

A. Ted and Lisa are customers, and Steven is a client. The listing agent must disclose to Steven that Ted and Lisa are customers.

B. Ted and Lisa are clients, as is Steven. The listing agent must disclose to Steven that Ted and Lisa are also clients.

C. Ted and Lisa are customers, and Steven is a client. The listing agent must disclose to Steven that he/she represents Ted and Lisa and explain customer relationships.

D. Ted and Lisa are clients, and Steven is a customer. The listing agent must disclose to Steven that he/she represents Ted and Lisa and explain customer relationships.

Ted and Lisa are considered clients because they signed a listing agreement with the agent. Steven is a customer as he is simply interested in purchasing their home but hasn't established a formal relationship. The agent must disclose their representation of Ted and Lisa to Steven.

Explanation:

Understanding Client vs. Customer Relationships in Real Estate

In the context of real estate transactions, agency relationships define the nature of the interaction between the agent, the principal (client), and any third parties (customers).

In the scenario provided, Ted and Lisa have signed a listing agreement; therefore, they are considered clients of the listing agent because they have engaged the agent to represent their interests in the sale of their property.

On the other hand, Steven, who is merely visiting an open house and expressing interest in the property, is categorized as a customer. This means that he does not have a formal relationship with the agent, as he has not entered into any agreement for representation.

According to real estate laws, since Ted and Lisa are clients, the listing agent is required to disclose to Steven that he represents Ted and Lisa and clarify the distinctions between the different relationships. Therefore, the correct answer is: D: "Ted and Lisa are clients, and Steven is a customer. The listing agent must disclose to Steven that he/she represents Ted and Lisa and explain customer relationships." This explanation helps maintain transparency and ethical practices within the profession.

Learn more about Agency Relationships here:

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