Tennessee Realtor State Practice Exam

What is Peter's relationship to the sellers when he represents Simon as a buyer?

1. The sellers are Peter's clients

2. The sellers are Peter's customers

3. The sellers are Peter's partners

4. The sellers are Peter's friends

The correct answer is: The sellers are Peter's customers

When Peter represents Simon as a buyer in a real estate transaction, the sellers are considered Peter's customers. This is because Peter has a fiduciary duty to his client, Simon, and his primary responsibility is to act in Simon's best interest throughout the buying process. The sellers, on the other hand, are not Peter’s clients because he does not have a contractual relationship with them that entails the same level of responsibility and loyalty. Instead, they are on the other side of the transaction and have a more limited status in this context, making them customers rather than clients. Customers are individuals who are involved in a transaction but do not receive the same level of fiduciary representation as clients do. This distinction is important in real estate relationships, as it defines the nature of Peter's obligations and interactions with each party involved in the transaction.