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Real Estate · Broker-Level Agency and Disclosure

How should a brokerage handle confidential client information when it represents both buyer and seller in a transaction?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

Protect each client's confidential information — such as their bargaining limits — and not disclose it to the other party, consistent with disclosed dual or designated agency rules

  1. A Reveal the buyer's maximum price to the seller
  2. B Share everything freely between the parties
  3. C Disclose the seller's bottom line to the buyer
  4. D Protect each client's confidential information — such as their bargaining limits — and not disclose it to the other party, consistent with disclosed dual or designated agency rules

Why this is the answer

When a brokerage represents both sides (dual agency) or uses designated agency, protecting each client's confidential information is critical. The brokerage must not reveal one party's confidential bargaining position — such as the lowest price a seller will accept or the highest a buyer will pay, or their motivations — to the other party. In disclosed dual agency the agent's duties are limited precisely to preserve this neutrality; in designated agency, separate agents advocate for each client while the broker manages the confidentiality wall. Improperly disclosing confidential information is a violation. State rules govern the permissibility and mechanics, and the state broker portion tests how brokerages safeguard client confidences in in-house transactions.
Source: Dual Agency Confidentiality at Brokerage Level

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About this topic: Broker-Level Agency and Disclosure

Broker-level agency and disclosure questions cover the state's required agency disclosures, forms and timing, dual agency consent, and the broker's responsibility for ensuring licensees comply. This is one of 6 Broker (State Law) questions on broker-level agency and disclosure, each with a full explanation on a single study page.

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