Agency
Agency questions ask whom the licensee works for and what that duty requires. Pearson VUE tests types of agency, creation and termination and licensee obligations (7 of the 16 contracts-and-agency questions); PSI gives agency 13%.
80 questions in 2 hours 30 minutes, 56 to pass. 7 of the 80 questions come from agency, and every answer is explained.
Or try the free agency drillA buyer's agent receives a $500 gift card from a home inspector for every client she refers, and she does not tell her clients. Which statement is most accurate?
What to know about agency
- An agent acts for a principal (client) in dealings with third parties (customers). A universal agent has broad authority, a general agent handles a continuing range of matters (a property manager), and a special agent is hired for one transaction, which is what a listing or buyer agency creates.
- Agency is created by express agreement (written listing or buyer representation agreement), by implied conduct, by ratification after the fact or by estoppel when the principal lets a third party believe an agency exists. Compensation does not create agency: the source of the commission does not decide whom the agent represents.
- Agency ends by performance, expiration, mutual agreement, revocation by the principal (possibly with liability for damages), renunciation by the agent, death or incapacity of either party, destruction of the property, bankruptcy or operation of law. Confidentiality survives termination.
- Fiduciary duties to the client: obedience to lawful instructions, loyalty, disclosure of everything material, confidentiality, accounting for funds and documents, and reasonable care and skill (remembered as OLD CAR).
- Duties to customers: honesty and fair dealing, disclosure of known material defects, and accurate answers. A seller’s agent must present all offers and may not reveal the seller’s bottom line, but must disclose known material facts about the property to buyers.
- Dual agency is representing both buyer and seller in the same transaction; it requires the informed written consent of both, and a few states prohibit it. Designated agency lets one broker appoint different licensees to each party. A transaction broker or facilitator assists without representing either side.
- Subagency arises when a cooperating broker works for the listing broker’s client; buyer agency replaced it in most markets because of the liability it created.
- Puffing is opinion ("the best view in town") and is lawful. Misrepresentation is a false statement of material fact; it is fraud when made knowingly to induce reliance, and negligent misrepresentation when the agent should have known better. A principal can be vicariously liable for the agent’s acts within the scope of the agency.
- Latent defects are hidden and not discoverable by ordinary inspection; the seller and agent must disclose those they know about even in an "as is" sale.
Pearson VUE outline area IV: 7 of the 80 scored national questions in our mock come from this topic. The notes state principles that hold in every state; state-specific rules are in the California, Texas and Florida guides.
Drill agency, then sit the full exam
80 questions in 2 hours 30 minutes, 56 to pass. 7 of the 80 questions come from agency, and every answer is explained.
Or try the free agency drillCommon questions
Who does a real estate agent represent?
The principal who engaged the agent, under the written agreement: the seller under a listing, the buyer under a buyer representation agreement. The party who pays the commission does not decide representation, and the other party is a customer owed honesty and disclosure of material facts.
What are the fiduciary duties of a real estate agent?
Obedience, loyalty, disclosure, confidentiality, accounting and reasonable care. Loyalty means putting the client’s interests ahead of the agent’s own, and confidentiality continues after the agency ends.
80 questions in 2 hours 30 minutes, 56 to pass. 7 of the 80 questions come from agency, and every answer is explained.
Or try the free agency drillMore real estate exam topics
- Property ownership and estates · 9 of 80
- Legal descriptions and land use controls · 6 of 80
- Valuation and appraisal · 11 of 80
- Contracts · 9 of 80
- Practice of real estate and fair housing · 10 of 80
- Property disclosures and environmental issues · 9 of 80
- Financing and settlement · 7 of 80
- Transfer of title · 5 of 80
- Real estate math · 7 of 80
Free agency drill · National mock exam · California exam · Texas exam · Florida exam
Original independent practice. Not affiliated with or endorsed by Pearson VUE, PSI or any state real estate commission.