When an Agent Sells His Own Listing, Should the Buyer Be a ‘Customer’ or ‘Client’?

The Colorado Real Estate Commission (CREC) takes our relationships with buyers and sellers very seriously.  There are three kinds of relationships: Agent, Transaction Broker and Customer. 

Technically speaking, only the first two of these are relationships because a “customer” is a person with whom the agent has no relationship.

The distinction between these three relationships becomes important when a listing agent “double ends” a transaction — that is, when the agent sells his listing to a buyer who does not have a buyer’s agent.

The CREC does not have a preference as to which relationship exists, but only that the relationship be disclosed to both parties.

At Golden Real Estate, our policy is to treat a buyer as a “customer” unless there is a bona fide pre-existing client relationship with the buyer.

This policy is not embraced by all brokerages or by all agents. This may be because the listing agent wants to “capture” the buyer in case the buyer does not succeed in buying that particular listing. So, instead of presenting the buyer with a disclosure that he/she is a “customer,” the listing agent may get the buyer to sign a buyer agency agreement and then present both buyer and seller with a disclosure that the agent is now a transaction broker — that is, a neutral facilitator of the transaction, not serving the interests of either party over the other.

At Golden Real Estate, we don’t think it’s fair or right for the listing agent to abandon his seller’s best interest so readily. To require that the buyer be treated as a “customer” does run the risk that the buyer will find another agent to represent him, which would greatly reduce the commission earned by the listing agent.  That’s because the listing commission — typically between 5 and 6 percent — is split between the listing agent and the buyer’s agent.

My personal solution is to offer a reduced commission for the seller when I sell the listing myself and to offer totally free moving — truck, gas, labor, boxes — to the buyer if he or she chooses to be unrepresented. This makes it a win-win for all.

Published June 23, 2016, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.