AgencyIntermediateCalifornia Exam

How is an agency relationship most commonly created in California real estate?

ABy oral agreement ratified by the DRE, as commonly applied in brokerage relationships
BBy express written agreement, such as a listing or buyer-broker agreementCorrect
CAutomatically when a licensee shows a property to a buyer, consistent with typical listing agreement terms
DWhen the broker receives compensation from any party, per standard fiduciary practice in the industry

Why By express written agreement, such as a listing or buyer-broker agreement Is Correct

Answer B: By express written agreement, such as a listing or buyer-broker agreement

Agency is most commonly created by an express written agreement — a listing agreement (creating seller agency) or a buyer-broker agreement (creating buyer agency). Agency can also arise by implication or ratification, but California's Statute of Frauds requires listing agreements to be in writing to be enforceable.

Exam Tip: Agency

Agency questions are among the most tested on the exam. Focus on the difference between client and customer, and memorize the fiduciary duties (OLD CAR). Watch for questions that try to blur the line between a general agent and a special agent.

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