Oregon 30-Hour Real Estate Law Practice Test

Which of the following best describes “dual agency” in real estate?

1. An agent representing both buyer and seller in a transaction

2. A situation where an agent has multiple listings

3. A method of appraising real estate

4. A violation of ethical practices in real estate

The correct answer is: An agent representing both buyer and seller in a transaction

Dual agency in real estate refers to the situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction. This arrangement allows for streamlined communication and negotiation since the same party is facilitating both sides of the deal. However, it also requires careful adherence to legal and ethical guidelines to ensure that both parties' interests are represented fairly and that confidential information is kept separate to prevent conflicts of interest. In this context, dual agency is not simply about an agent having multiple listings (which is a common practice and does not inherently create a conflict). It also is not a method of appraising real estate, which is a distinct process involving measuring property value based on various factors. Additionally, while dual agency does raise ethical considerations, it is not inherently a violation of ethical practices as long as it is conducted transparently and in accordance with applicable laws. Proper disclosure to both parties is a critical aspect of maintaining the integrity of a dual agency relationship, making it a legitimate practice within real estate transactions.