Types of Agency
What are the different types of agency I must know for my exam?
There are three main types of agency in real estate you must know for your licensing exam. However, initially, you must understand what an agent is. An agent is someone who represents someone else (principal) while working with third parties. In a real estate transaction, a principal is also referred to as the client. The relationship between an agent and the principal is known as agency.
Under the different types of agency, who exactly is the agent and the principal?
The agent is the broker who is hired by a buyer or seller (principal) to help them sell or buy real estate. A real estate broker who is engaging in the act of bringing parties together for the rent, purchase, or exchange of real estate in return for a fee is said to be engaging in brokerage.
In performing this service the broker and the party they represent (principal) will create an agency relationship.
Check out our article on how an agency is created here.
So, what are the different types of agency relationships I must know for my real estate licensing exam?
The level of agency that a principal grants an agent determines what type of agency agreement they have in place. The principal can allow the agent to act in a very broad manner on their behalf, or very minimal. You must know the following types of agency to be prepared to pass your real estate exam:
1 – Special agent – This is when an agent is granted the authority to represent a principal or client in a specific task or transaction. You always wanted to be a special agent right? Well 007, here is your chance. This is the type of agency usually created when a broker represents a buyer or seller in a real estate transaction. One single specific transaction! Special starts with S and so does specific. An easy way to remember this one.
2 – General agent – A property manager is an excellent example of a general agent. A general agent represents the principal in a range of activities or a particular business. A general power of attorney can create this type of agency.
3 – Universal agent – An agent who represents the principal in all of their legal matters is a universal agent. Makes sense, right? A power of attorney is always necessary to create this type of agency. A power of attorney is a document authorizing someone else (referred to as an attorney-in-fact) to act as an agent for another person.
How can a agency be terminated?
You can learn how an agency can be terminated by reading our article here.
Under a real estate agency, what agent responsibilities does the agent owe the client?
Learn everything you need to know about this topic in our real estate exam prep article here.
Here is a sample real estate exam question based upon types of agency:
Here you go:
Under the law of agency, which of the following would be working as a general agent:
A. A broker authorized to lease a property for a dentist
B. A broker authorized to transact all real estate transactions for a teacher
C. A broker authorized to sell a laundromat
D. A broker authorized to find a buyer for an agricultural property
Explanation: Remember, a special agent represents the principal in a specific transaction (S and S). A general agent represents a principal in a range of related or particular activities, such as in this question. A universal agent represents the principal in all legal matters.
If you want to see more FREE sample real estate licensing exam questions click here.
What else can help me prepare to pass my real estate licensing exam on my first attempt?
Other tips to help you pass your real estate licensing exam on your first attempt:
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