Oregon 30-Hour Real Estate Law Practice Test

Which of the following is a potential conflict of interest in a real estate transaction?

1. Representing both parties in a sale

2. Offering advice to first-time buyers

3. Providing market analysis to clients

4. Conducting open houses for multiple listings

The correct answer is: Representing both parties in a sale

Representing both parties in a sale creates a potential conflict of interest because it can lead to divided loyalties. In real estate transactions, each party typically has opposing interests—such as a seller wanting the highest price and a buyer wanting the lowest price. When a single agent represents both sides, it becomes challenging to advocate effectively for both parties' interests without compromising one party's position. The agent must navigate this dual representation delicately to avoid biases that could favor one party over the other, thus resulting in a potential conflict. The other options do not inherently present such conflicts. Offering advice to first-time buyers can be seen as providing support and education without conflicting interests. Similarly, providing market analysis serves the purpose of informing clients based on data, which is a standard practice in the industry. Conducting open houses for multiple listings is part of typical real estate marketing practices and does not suggest a conflict of interest as long as the listings belong to different sellers.