NAR Agency Relationships & Fiduciary Duties 2

Question 1

In real estate, what is the key distinction between a 'client' and a 'customer'?

Accepted Answer

A client has a signed agency agreement and receives fiduciary duties; a customer does not

Answer

A client pays a higher commission than a customer

Answer

A customer is always represented by a buyer's agent

Answer

A client is only the seller, while a customer is the buyer

Question 2

What document typically establishes an exclusive buyer agency relationship?

Accepted Answer

A buyer representation agreement

Answer

A purchase and sale agreement

Answer

A listing agreement

Answer

A cooperating broker agreement

Question 3

Designated agency occurs when:

Accepted Answer

A broker assigns specific agents to represent each party in a transaction within the same brokerage

Answer

A state licensing board designates a broker as the official agent for a region

Answer

An agent is designated as a dual agent by the MLS

Answer

The court appoints an agent to handle a property in dispute

Question 4

Under the fiduciary duty of obedience, an agent must follow client instructions EXCEPT when those instructions:

Accepted Answer

Violate the law or the agent's ethical obligations

Answer

Require the agent to work overtime without extra pay

Answer

Are inconvenient or time-consuming for the agent

Answer

Conflict with the agent's personal real estate strategy

Question 5

When does an agency relationship most commonly terminate?

Accepted Answer

Upon expiration of the agreement, completion of the transaction, or mutual agreement to terminate

Answer

When the agent takes a vacation

Answer

When the client contacts another agent for information

Answer

After 90 days from the listing date, regardless of contract terms

Question 6

Which scenario BEST illustrates a breach of the fiduciary duty of confidentiality?

Accepted Answer

An agent discloses to a buyer that the seller is going through a divorce and must sell quickly

Answer

An agent tells the buyer that the seller just completed a home inspection

Answer

An agent informs the seller of the buyer's offer amount

Answer

An agent shares the listing price with other agents on MLS

Question 7

In a transaction brokerage (non-agency) arrangement, the broker owes the parties:

Accepted Answer

Limited duties including honesty, fair dealing, and disclosure of material facts, but not full fiduciary duties

Answer

Full fiduciary duties identical to traditional agency

Answer

No duties whatsoever since no agency is created

Answer

Fiduciary duties only to the party who pays the commission