PSI Oklahoma Real Estate Practice Test

What defines the relationship where a broker represents both the buyer and seller?

1. Single Agency

2. Dual Agency

3. Designated Agency

4. Agency by Estoppel

The correct answer is: Dual Agency

The correct choice is dual agency, which is defined as a situation where a broker represents both the buyer and the seller in a real estate transaction. This relationship can be beneficial as it allows a broker to facilitate communication and negotiation between both parties. However, it requires careful management to avoid conflicts of interest, as the broker must remain neutral and act in the best interest of both clients. In dual agency, the broker must disclose this relationship to both parties and often requires written consent from each to proceed, ensuring transparency and fairness. It's a unique arrangement that highlights the role of the broker as an intermediary. Other choices highlight different types of agency relationships. Single agency refers to a broker who represents only one party in a transaction, either the buyer or the seller. Designated agency occurs when a broker designates one agent to represent the seller and another agent in the same firm to represent the buyer, mitigating some of the conflicts seen in dual agency. Agency by estoppel arises when a relationship is assumed by actions rather than explicit agreement, often leading to unintended agency obligations. Understanding these distinctions is key for anyone entering the real estate field.