California Real Estate Practice Exam

What does a buyer's agency agreement generally advise the buyer?

1. That the buyer should inspect the property themselves

2. That the broker may collect a fee from the seller and may represent both parties

3. That all properties come with a warranty

4. That they have a right to legal counsel

The correct answer is: That the broker may collect a fee from the seller and may represent both parties

The correct choice highlights an important aspect of real estate transactions: a buyer's agency agreement informs the buyer that the broker may collect a fee from the seller and could potentially represent both the buyer and the seller in certain situations. This arrangement is known as dual agency, and it's crucial for buyers to understand this possibility as it can impact their representation and the broker's fiduciary duties. Buyers should be aware that although the broker is working on their behalf, the broker may also have obligations to the seller. This makes it essential for the buyer to have clarity on the terms of the agreement and the nature of the relationship with the broker. The other options, while mentioning important aspects of the buying process, do not encapsulate the main focus of a buyer's agency agreement. A buyer's agency does not primarily advise the buyer to inspect the property themselves or guarantee that all properties come with a warranty. Additionally, while the right to legal counsel is important, it is not a key feature covered specifically in buyer's agency agreements, which focus more on the relationship and obligations between the buyer and the broker.