Tennessee Realtor State Practice Exam

A broker would not be considered a dual agent for an in-house transaction if:

1. The clients agree to split the commission

2. The clients have designated agency agreements

3. The transaction is for a commercial property

4. The clients are friends of the broker

The correct answer is: The clients have designated agency agreements

In an in-house transaction, the concept of dual agency applies when a broker represents both the buyer and the seller. A broker would not be considered a dual agent if the clients have designated agency agreements, which allow different agents within the same brokerage to represent the buyer and the seller separately. This distinction ensures that each party receives their specific representation and interests are maintained independently, thus avoiding the potential conflict of interest that dual agency can create. In scenarios where clients agree to split the commission, the nature of the agency representation does not change, which means dual agency may still apply. Similarly, the type of property involved, whether commercial or residential, does not inherently influence the status of dual agency without the presence of designated agency agreements. Friends of the broker being involved also doesn’t negate the dual agency situation unless proper designated representation is established. Therefore, having designated agency agreements is key to preventing dual agency in transactions where both buyer and seller are represented within the same brokerage.