If you’re studying to pass the real estate exam in your state, you’re likely looking to become a real estate agent. Therefore, it’s important to understand what your agency means.
In real estate, an agency relationship is a legally binding relationship between a client and their agent during a buying or selling transaction. When an agency is created, a client is engaging a licensed professional to act on their behalf.
One of the most important elements of an agency relationship is the fiduciary responsibility that is created. An agent with a fiduciary responsibility has a legal requirement to act in the best interest of their client during any and all possible real estate transactions.
Fiduciary responsibilities can be summarized with the acronym OLDCAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care.
In most states, to create an agency relationship, an agreement has to be signed. When an agency agreement is signed, an interested party or customer becomes a client. At this point, the agent has a fiduciary responsibility to the client and must adhere to the specific responsibilities and standards set forth in that agreement.
An agency relationship can be either a single agency or dual agency. A single agency relationship is when an agent represents either a buyer or a seller. A dual agency relationship is when a single agent represents both the buyer and seller.
Dual agency relationships are complicated and illegal in some states. For more information on dual agency, watch our video on the topic found inside our real estate exam preparation course.
If you want to see some examples of questions that will be on the actual real estate exam, check out our free real estate practice exam. We have been named as the best real estate exam practice for 7 years in a row!
If you need to get your required educational hours done, check out our partners for online real estate education that can be done at your own pace from home or where ever you have internet access.
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