Texas · state portion

Free Agency & Brokerage (Texas) practice questions

10 original questions with full explanations. 11 of the 40 scored state-portion questions (about 28%) come from this area.

1. 1

   In Texas, a broker who facilitates a transaction between a buyer and seller the brokerage represents, with written consent of both, acts as:

   • A. An intermediary
   • B. A subagent
   • C. A dual agent by default
   • D. A transaction facilitator with no duties
   Show answer & explanation

   Answer: A

   Texas replaced common-law dual agency with statutory intermediary status — requiring written consent from both parties, typically in the listing/representation agreements.

2. 2

   The Information About Brokerage Services (IABS) notice must be provided:

   • A. At the first substantive communication with a party
   • B. Only at closing
   • C. Only if the party asks
   • D. After the contract is executed
   Show answer & explanation

   Answer: A

   License holders must give the IABS form at first substantive communication about a specific property with a party they don't represent.

3. 3

   What is required for a broker to act as an intermediary in a Texas real estate transaction?

   • A. Written consent from both parties
   • B. Verbal consent from both parties
   • C. Written notice to one party
   • D. No consent is required
   Show answer & explanation

   Answer: A

   A broker must obtain written consent from both parties to act as an intermediary, replacing the common-law concept of dual agency.

4. 4

   When must a broker provide the Information About Brokerage Services (IABS) form to a potential client?

   • A. At the signing of a listing agreement
   • B. At the first substantive contact
   • C. When a sales contract is executed
   • D. At the closing of a transaction
   Show answer & explanation

   Answer: B

   The IABS form must be provided at the first substantive contact between a broker and a potential client, which is typically the initial meeting or conversation.

5. 5

   What type of agreement allows a buyer to be represented by a broker in a Texas real estate transaction?

   • A. Listing agreement
   • B. Buyer/tenant representation agreement
   • C. Exclusive right to sell agreement
   • D. Subagency agreement
   Show answer & explanation

   Answer: B

   A buyer/tenant representation agreement allows a buyer to be represented by a broker, outlining the terms and scope of the representation.

6. 6

   What is the primary purpose of a listing agreement in Texas?

   • A. To establish a buyer/tenant representation agreement
   • B. To grant a broker the authority to market a property for sale
   • C. To create a subagency relationship
   • D. To provide a broker with a commission advance
   Show answer & explanation

   Answer: B

   A listing agreement grants a broker the authority to market a property for sale, outlining the terms and conditions of the listing, including the commission rate and duration.

7. 7

   Which of the following is a characteristic of a subagency relationship in Texas?

   • A. The subagent represents the buyer
   • B. The subagent is a buyer's agent
   • C. The subagent represents the seller and owes a fiduciary duty to the seller
   • D. The subagent is not required to disclose their role to the buyer
   Show answer & explanation

   Answer: C

   In a subagency relationship, the subagent represents the seller and owes a fiduciary duty to the seller, not the buyer.

8. 8

   What is the responsibility of a broker in supervising sponsored agents in Texas?

   • A. To ensure compliance with all applicable laws and regulations
   • B. To provide training on sales techniques only
   • C. To review and approve all sales contracts
   • D. To conduct regular performance evaluations only
   Show answer & explanation

   Answer: A

   A broker is responsible for ensuring that sponsored agents comply with all applicable laws and regulations, including those related to agency, contracts, and ethics.

9. 9

   What is the consequence of a broker failing to provide the IABS form to a potential client at the first substantive contact?

   • A. The broker is not liable for any damages
   • B. The broker's license is automatically suspended
   • C. The broker may be subject to disciplinary action by TREC
   • D. The broker is required to pay a fine to the client
   Show answer & explanation

   Answer: C

   A broker who fails to provide the IABS form to a potential client at the first substantive contact may be subject to disciplinary action by TREC, including fines or other penalties.

10. 10

    A Texas broker is working with a buyer who is interested in purchasing a property listed with the broker's firm. What must the broker do to comply with Texas law?

    • A. Obtain written consent from the buyer to represent them as an intermediary
    • B. Obtain written consent from the seller to represent them as an intermediary
    • C. Obtain written consent from both the buyer and seller to represent them as an intermediary
    • D. Disclose the potential for dual agency to the buyer and seller
    Show answer & explanation

    Answer: C

    In Texas, a broker must obtain written consent from both parties to act as an intermediary, which replaces the common-law concept of dual agency.