Illinois Leasing Agent Practice Exam

What occurs when a broker represents both the buyer and seller in the same transaction?

1. Single agency

2. Dual agency

3. Exclusive agency

4. Subagency

The correct answer is: Dual agency

When a broker represents both the buyer and the seller in the same transaction, this situation is referred to as dual agency. In dual agency, the broker must navigate the interests of both parties while ensuring that they comply with ethical and legal obligations. This arrangement can often require special disclosures and consents from both the buyer and the seller, as the broker is essentially working for both sides, which can create potential conflicts of interest. The dual agency relationship means that the broker cannot favor one party over the other, as they have a fiduciary duty to both. It’s crucial for brokers engaged in dual agency to maintain transparency and clearly outline their role to all parties involved to avoid any misunderstandings. In contrast, single agency refers to a situation where the broker exclusively represents either the buyer or the seller, but not both. Exclusive agency is a type of listing agreement where a seller grants exclusive rights to one broker but retains the right to sell the property themselves without owing a commission. Subagency involves a broker who assists another broker in representing a client and is typically not considered a direct representation of either party in the transaction.