Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What does the term "agency relationship" refer to?

1. The bond formed by two buyers in a sale.

2. The contractual relationship between an agent and a client.

3. The agreement between two parties to negotiate properties.

4. The relationship between a third party and a broker.

The correct answer is: The contractual relationship between an agent and a client.

The term "agency relationship" specifically refers to the contractual relationship between an agent and a client. In real estate, this relationship is foundational as it establishes the legal obligations and responsibilities of the agent to the client. The agent is authorized to act on behalf of the client in real estate transactions, which can include buying, selling, leasing, or managing property. This relationship is formalized through a contract, such as a listing agreement or buyer representation agreement, which delineates the scope of the agent’s authority and the duties owed to the client, including loyalty, confidentiality, and disclosure. Understanding this concept is crucial for anyone involved in real estate, as it defines the roles and responsibilities of the parties involved in a transaction. The other options do not accurately capture the essence of the agency relationship; they pertain to different aspects of real estate transactions or do not involve the agent-client dynamic directly.