Real Estate Sales Exam Agency and Fiduciary Duties 2 — Questions and Answers
Question 1: A seller's agent learns that the seller is willing to accept $20,000 less than the asking price. What must the agent do with this information?
- Disclose it to the buyer to close the deal faster
- Keep it confidential as it belongs to the seller (Correct answer)
- Share it with the buyer's agent only
- Disclose it in the MLS listing
Correct answer: Keep it confidential as it belongs to the seller
A seller's agent must maintain confidentiality of the seller's minimum acceptable price, as disclosing it would breach the fiduciary duty of confidentiality owed to the seller.
Question 2: What is a 'dual agency' situation in real estate?
- An agent who holds two different licenses
- When one agent or brokerage represents both buyer and seller in the same transaction (Correct answer)
- Two agents co-listing a property together
- An agent licensed in two different states
Correct answer: When one agent or brokerage represents both buyer and seller in the same transaction
Dual agency occurs when the same agent or brokerage represents both the buyer and seller in a single transaction, creating potential conflicts of interest.
Question 3: Which fiduciary duty requires an agent to place the client's interests above their own personal interests?
- Disclosure
- Loyalty (Correct answer)
- Obedience
- Accountability
Correct answer: Loyalty
The duty of loyalty requires an agent to act solely in the client's best interest and avoid any self-dealing or conflicts of interest.
Question 4: A buyer's agent discovers that the home has foundation issues the seller hasn't mentioned. The agent must:
- Say nothing to avoid disrupting the transaction
- Disclose the defect to the buyer client (Correct answer)
- Inform the seller's agent and let them handle it
- Disclose only if the buyer specifically asks
Correct answer: Disclose the defect to the buyer client
A buyer's agent owes the duty of disclosure to their client and must reveal all material facts that could affect the buyer's decision, including known defects.
Question 5: An agent who follows a client's lawful instructions even when they personally disagree is fulfilling which duty?
- Obedience (Correct answer)
- Care
- Loyalty
- Confidentiality
Correct answer: Obedience
The duty of obedience requires an agent to follow all lawful instructions given by the principal, even if the agent personally disagrees with them.
Question 6: When does a buyer's agency relationship typically begin?
- When the buyer makes an offer on a property
- When a buyer-broker agreement is signed (Correct answer)
- When the agent first shows the buyer a home
- When the buyer obtains mortgage pre-approval
Correct answer: When a buyer-broker agreement is signed
A formal buyer's agency relationship is established when a buyer-broker agreement is signed, creating enforceable duties between the parties.
Question 7: Which of the following is NOT one of the traditional fiduciary duties owed by an agent to their client?
- Loyalty
- Confidentiality
- Profitability (Correct answer)
- Disclosure
Correct answer: Profitability
Profitability is not a fiduciary duty; the traditional duties are loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care (LODCAR).
Real Estate Sales Exam Agency and Fiduciary Duties 2
A seller's agent learns that the seller is willing to accept $20,000 less than the asking price.
What must the agent do with this information?