An arrangement where one agent or brokerage represents both the buyer and seller in the same transaction.
Why Dual Agency matters on the exam
This term belongs to Agency. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Dual Agency
Every Freehold question shows why the right answer is right — and cites its source.
A broker discovers that an affiliated agent has been telling buyers the brokerage represents them exclusively, when in fact the firm has a written dual agency policy. What is the broker's appropriate next step?
Ignore the issue as long as the agent meant well
Correct the misrepresentation and ensure the agent follows proper disclosure practices going forward
Wait until a client files a formal complaint before acting
Terminate the agent's real estate license, since only the broker can do so
Show answer & explanation
Correct the misrepresentation and ensure the agent follows proper disclosure practices going forward — Because supervision requires brokers to correct known compliance problems, a broker who learns of a misrepresentation must act promptly to fix it and prevent recurrence.
Source: PSI National Real Estate Exam Content Outline — Broker Supplement
A key advantage of single agency compared to dual agency is that it allows the agent to:
Earn a materially larger commission than the same agent would earn in a comparable dual agency transaction
Provide full, undivided loyalty and advocacy to one client without conflicting duties to the other side
Avoid completing any of the agency disclosure paperwork the state otherwise requires for the transaction
Represent an unlimited number of buyers and sellers simultaneously within the very same transaction
Show answer & explanation
Provide full, undivided loyalty and advocacy to one client without conflicting duties to the other side — Because single agency avoids the divided loyalty inherent in representing both sides, the agent can fully advocate for the one client's best interests.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
A seller's agent under a single agency arrangement shows the listed property to an unrepresented buyer who asks the agent for advice on how much to offer. The agent should:
Freely give the buyer strategic negotiating advice on price and terms, since being helpful to both sides builds goodwill and repeat business
Immediately become the buyer's agent as well, without disclosing the change to the seller
Refuse to show the buyer the property at all until they retain their own agent
Clarify that the agent represents only the seller and cannot advise the buyer on negotiating strategy against the seller's interests
Show answer & explanation
Clarify that the agent represents only the seller and cannot advise the buyer on negotiating strategy against the seller's interests — Giving a customer negotiating advice would conflict with the undivided loyalty owed to the seller-client, so the agent must clarify their role to avoid an unintended dual agency.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
Freehold is an independent study resource and is not affiliated with, endorsed by, or sponsored by PSI, Pearson VUE, or any state real estate licensing board or commission. Freehold does not guarantee passage of any licensing exam.
