Oregon 30-Hour Real Estate Law Practice Test

What must an agent do when they have a dual agency?

1. Disclose the relationship to both parties

2. Prioritize one client over the other

3. Negotiate commissions independently

4. Keep information secret between clients

The correct answer is: Disclose the relationship to both parties

When an agent is functioning in a dual agency capacity, they are representing both the buyer and the seller in a real estate transaction simultaneously. This situation creates a potential conflict of interest, as the agent must navigate the interests of both parties. The primary responsibility of the agent in this scenario is to disclose the dual agency relationship to both parties involved. This disclosure is crucial because it allows both the buyer and the seller to make informed decisions about their representation. Transparency is a key ethical consideration in real estate transactions, and the law often requires this disclosure to ensure that both clients understand the nature of the agent's role and the potential implications for their negotiations and decision-making processes. The option that suggests prioritizing one client over the other goes against the fundamental principle of dual agency, which necessitates an impartial approach to serve both parties fairly. Additionally, negotiating commissions independently could lead to further conflicts and is not appropriate in a dual agency situation where the agent must maintain fairness. Lastly, keeping information secret between clients would undermine the duty of confidentiality that agents owe to their clients but can also damage the trust needed in a dual agency relationship. Therefore, the best course of action is for the agent to disclose their dual agency status to both clients effectively.