TREC Law of Agency Practice Exam 2026 - Free Law of Agency Practice Questions and Study Guide

Dual representation in real estate occurs when an agent represents both the buyer and the seller in the same transaction. This situation can create potential conflicts of interest, as the agent must balance the needs and interests of both parties.

The correct understanding involves the necessity for transparency. The agent must disclose the dual representation to both parties involved, ensuring that they are aware of the dual role that the agent is taking on. This disclosure is crucial as it allows all parties to make informed decisions regarding their representation and to understand the potential implications of having the same agent represent both sides of the transaction.

By informing both the buyer and the seller, the agent upholds professional standards and ethical obligations, facilitating trust and clear communication throughout the transaction process. It also protects the agent from potential legal repercussions related to confidentiality breaches or ties that could unfairly benefit one party over the other.