PSI Virginia Real Estate Practice Exam

What constitutes Dual Agency in real estate?

1. Representing only buyers

2. Representing only sellers

3. Representing both parties without consent

4. Representing both parties with consent

The correct answer is: Representing both parties with consent

Dual agency in real estate occurs when a single agent or brokerage represents both the buyer and the seller in the same transaction. The defining feature of dual agency is that both parties are informed of this arrangement and give their consent to the representation. By doing so, the agent maintains transparency and adheres to legal and ethical standards, which prioritize the interests of both clients. In this scenario, both the buyer and seller must understand that the agent is acting on behalf of both parties and agree to this dual representation. This ensures that all parties are aware of potential conflicts of interest and can make informed decisions during the transaction. It's crucial for agents to communicate clearly with both clients about the nature of their relationship and any limitations that may arise from representing both sides. In contrast, representing only buyers or only sellers does not constitute dual agency because there is no simultaneous representation of both parties. Additionally, representing both parties without consent would violate ethical guidelines and legal requirements, as agents must have the explicit agreement of all parties involved to practice dual agency.