California Real Estate Practice Exam

A buyer's broker representing two buyers for the same house is

1. A conflict of interest

2. Illegal

3. A possible dual agency or permitted if both agree

4. Standard practice

The correct answer is: A possible dual agency or permitted if both agree

The scenario describes a situation where a buyer's broker is representing two buyers interested in purchasing the same house, which raises the concept of dual agency. In California, dual agency occurs when a single real estate broker represents both the buyer and the seller in the same transaction. It is allowed under California law, provided that both parties give their informed consent. In this case, if the broker discloses the dual representation to both buyers and gets their agreement, it is entirely permissible and legal. However, the broker must tread carefully to ensure transparency and protect the interests of both clients, as this situation can lead to potential conflicts of interest. Understanding dual agency is critical for real estate professionals because it requires adhering to legal obligations and ethical standards to ensure that all parties are treated fairly and that their interests are represented, even if one broker is handling both parties. This nuanced approach reflects the complexity involved in real estate transactions where multiple clients may be vying for the same property.