Maryland Home Improvement PSI Practice Exam

When a licensee has an agency representation agreement with a buyer and shows another company's listing, what obligation does the licensee have?

1. There is no obligation because the buyer's agent has a fiduciary duty to the buyer.

2. The buyer's agent will be paid by the buyer and has no obligations to the seller or his agent.

3. The listing broker works for the seller and has no right to any information from the buyer's broker or the buyer.

4. Disclose the agency relationship when arranging the showing and disclose material information about the buyer if presenting an offer.

The correct answer is: Disclose the agency relationship when arranging the showing and disclose material information about the buyer if presenting an offer.

The correct answer emphasizes the necessity for the licensee to maintain transparency and uphold professional standards while representing the buyer. When a licensee has an agency representation agreement with a buyer, they are bound by fiduciary duties, which include loyalty, confidentiality, and full disclosure. By disclosing the agency relationship when arranging the showing, the licensee is ensuring that all parties involved are aware of who represents whom. This is crucial for maintaining trust and clarity in the transaction. Furthermore, disclosing material information about the buyer when presenting an offer is vital to ensure that the seller and their agent have a complete understanding of the buyer’s position, which can facilitate better negotiations. This approach aligns with ethical practices in real estate transactions, as it fosters an atmosphere of honesty and integrity, protecting the interests of all parties involved. Such transparency can help avert misunderstandings and support a smoother transaction process.