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

What obligation does a broker owe to their principal?

1. General oversight of communications

2. A high fiduciary obligation

3. A low-level compliance obligation

4. A minimal ethical obligation

The correct answer is: A high fiduciary obligation

A broker owes a high fiduciary obligation to their principal, which is a foundational principle in real estate practice. This fiduciary relationship is characterized by trust, confidence, and reliance on the broker to act in the best interests of the principal throughout the transaction. Fiduciary duties include loyalty, disclosure, confidentiality, obedience, full accounting, and reasonable care. The broker must prioritize the interests of the principal above their own, ensuring that all actions taken are conducive to achieving the principal's goals, whether in selling, buying, or leasing property. This includes keeping the principal informed about all relevant information regarding the transaction and negotiating the best possible terms. In contrast, other options suggest varying degrees of obligation that do not accurately reflect the high standard held by brokers. For instance, general oversight of communications or low-level compliance obligations would not encapsulate the depth of responsibility a broker has to their principal. A minimal ethical obligation would also undermine the seriousness of the fiduciary relationship that governs real estate transactions. Thus, recognizing the high fiduciary obligation enshrines the core ethical and professional standards expected within the real estate brokerage context.