Real Estate Sales Exam FREE Real Estate Sales Agency Law and Fiduciary Duties Questions and Answers 2 — Questions and Answers
Question 1: A buyer's agent learns that the buyer plans to offer $350,000 for a property but would pay up to $400,000. What is the agent's fiduciary obligation regarding this information?
- Disclose it to the seller to facilitate the deal
- Keep it confidential and not reveal it to the seller (Correct answer)
- Share it with the listing agent as a professional courtesy
- Report it to the state real estate commission
Correct answer: Keep it confidential and not reveal it to the seller
A buyer's agent owes the duty of confidentiality and must not disclose the buyer's maximum price or negotiating strategy to the seller or seller's agent.
Question 2: Which type of agency relationship is created when a real estate agent represents both the buyer and the seller in the same transaction?
- Universal agency
- Single agency
- Dual agency (Correct answer)
- Designated agency
Correct answer: Dual agency
Dual agency occurs when one agent or brokerage represents both the buyer and the seller in the same transaction, requiring informed written consent from both parties.
Question 3: An agent who owes a fiduciary duty of obedience must do which of the following?
- Follow all client instructions regardless of legality
- Follow all lawful instructions from the client (Correct answer)
- Obey only written instructions from the client
- Follow instructions from both the client and cooperating agents
Correct answer: Follow all lawful instructions from the client
The duty of obedience requires an agent to follow all lawful instructions from the client, but an agent must never follow instructions that would violate the law.
Question 4: A listing agent discovers that the property has a cracked foundation that the seller has not disclosed. What must the agent do?
- Keep the information confidential as part of the duty of loyalty
- Disclose the defect to prospective buyers (Correct answer)
- Wait until a buyer asks about structural issues before disclosing
- Only disclose the defect if required by the buyer's agent
Correct answer: Disclose the defect to prospective buyers
Material defects affecting property value or safety must be disclosed to all parties regardless of confidentiality obligations, as agents cannot conceal known material facts.
Question 5: In a designated agency arrangement, which statement is TRUE?
- The broker acts as a dual agent while individual agents represent separate clients (Correct answer)
- Neither the buyer nor seller has representation
- Both designated agents share all client information with each other
- The broker has no supervisory responsibility over either agent
Correct answer: The broker acts as a dual agent while individual agents represent separate clients
In designated agency, the broker assigns separate agents to represent the buyer and seller independently, while the broker typically maintains a supervisory dual agency role.
Question 6: Which fiduciary duty requires an agent to place the client's interests above the interests of all other parties, including the agent's own interests?
- Duty of disclosure
- Duty of accounting
- Duty of loyalty (Correct answer)
- Duty of reasonable care
Correct answer: Duty of loyalty
The duty of loyalty requires an agent to always prioritize the client's interests above those of all other parties, including the agent's own personal or financial interests.
Real Estate Sales Exam FREE Real Estate Sales Agency Law and Fiduciary Duties Questions and Answers 2
A buyer's agent learns that the buyer plans to offer $350,000 for a property but would pay up to $400,000.
What is the agent's fiduciary obligation regarding this information?