North Dakota Real Estate Practice Exam

True or False: Dual agency exists when both the seller and buyer have written agency agreements with the same brokerage.

1. True

2. False

3. Depends on state regulations

4. Only if a designated broker is involved

The correct answer is: True

Dual agency indeed occurs when both the seller and buyer have written agency agreements with the same brokerage. In this situation, the brokerage represents both parties in the transaction, which can create potential conflicts of interest, as the agent must balance the needs and interests of both the buyer and the seller. In many states, including North Dakota, dual agency is permitted as long as it is disclosed to both parties and all parties agree to it. This disclosure ensures transparency in the transaction and allows all parties involved to understand the implications of dual representation. Understanding that a dual agency maintains the interest of both the buyer and seller is crucial, particularly regarding negotiations and confidentiality. Agents in a dual agency situation must be careful to uphold their fiduciary duties to both clients, which further underscores the importance of proper disclosures and agreements in the real estate process. The concept may vary by state, and some states have specific regulations regarding dual agency practices, which explains why knowing local laws is essential for real estate professionals. While designated brokers can play a role in managing dual agency situations, the key element remains the establishment of written agreements with both parties represented by the same brokerage.