Tennessee Realtor State Practice Exam

What type of agency relationship allows two licensees in the same brokerage to represent different parties?

1. Dual agency

2. Designated agency

3. Transactional agency

4. Facilitated agency

The correct answer is: Designated agency

Designated agency refers to a specific arrangement within a brokerage where two licensees represent different clients in the same transaction. In designated agency, one licensee acts on behalf of the buyer while another licensee in the same brokerage represents the seller. This arrangement helps to avoid conflicts of interest that can arise in dual agency situations, where a single agent represents both parties. The main advantage of designated agency is that it allows the brokerage to facilitate the transaction and draw on the expertise of multiple agents while still maintaining the need for loyalty and confidentiality to each client's best interests. This setup is essential in promoting fair representation for both parties while leveraging the resources of the brokerage. Other agency types, like dual agency, involve a single agent representing both parties, which can lead to potential conflicts. Transactional agency and facilitated agency typically denote scenarios where an agent provides limited assistance without acting in a fiduciary capacity for either party. Hence, designated agency is the correct answer as it efficiently supports the representation of distinct parties within the same brokerage.