Tennessee Realtor State Practice Exam

What type of agency relationship does Monica have with the seller and buyer?

1. Dual agency

2. Exclusive agency

3. Multiple representation

4. Individual agency

The correct answer is: Dual agency

Monica has a dual agency relationship with both the seller and the buyer. In a dual agency situation, a real estate agent represents both parties in a transaction. This relationship is unique because the agent must remain neutral and cannot advocate for one party over the other, ensuring that both the seller and buyer receive fair treatment and information. Dual agency is permitted in many states, including Tennessee, as long as all parties involved are fully informed and consent to the arrangement. This type of agency can facilitate smoother transactions since the agent has access to both sides of the negotiation, but it also requires careful management to avoid conflicts of interest. The other agency types, such as exclusive agency, multiple representation, and individual agency, do not accurately describe the situation where one agent represents both the seller and buyer in the same transaction. Exclusive agency refers to a relationship where one agent has the exclusive right to represent a seller, but not necessarily both the seller and buyer simultaneously. Multiple representation generally indicates that different agents represent different parties within the same firm, which differs from a single agent controlling both sides of the deal. Individual agency involves an agent representing only one party, either the buyer or the seller, without the influence or interplay characteristic of dual agency.