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

What forms most agency relationships in real estate?

1. Implied Contract

2. Express Agreement

3. Informal Agreement

4. Verbal Agreement

The correct answer is: Express Agreement

The formation of agency relationships in real estate is predominantly based on an express agreement. An express agreement is a clear, definitive contract in which the parties involved explicitly state their intentions and terms regarding the agency relationship. This can be written or verbal, but in most cases, a written agreement is preferable, as it provides tangible evidence of the agreed-upon terms, duties, and responsibilities involved. In real estate, express agreements ensure that both the agent and the principal understand the scope of the relationship, including the duties of the agent, the fees involved, and any applicable timelines. Having a formal foundation minimizes confusion and protects the interests of all parties involved, which is particularly important given the financial and legal implications of real estate transactions. While other types of agreements can influence agency relationships, they typically lack the clarity and comprehensiveness of an express agreement. Implied contracts, for example, may lead to understanding based on actions rather than clear terms, which can create uncertainty. Informal and verbal agreements can often leave room for misinterpretation and disputes, making them less reliable as a foundation for agency relationships in real estate.