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

Who has the authority to enter into an agency relationship with clients such as sellers or buyers?

1. Realtor

2. Broker

3. Agent

4. Investor

The correct answer is: Broker

The broker has the authority to enter into an agency relationship with clients such as sellers or buyers. In a real estate context, the broker is the licensed individual or firm responsible for the actions of their agents. They are the ones who create the agency relationship, allowing them to represent clients in transactions involving buying or selling properties. Brokers hold a higher level of licensing than agents and are qualified to manage real estate offices, supervise agents, and ensure compliance with laws and regulations. The broker's role includes negotiating contracts on behalf of the client, making decisions that best serve the client’s interest, and providing guidance throughout the transaction process. While agents, also known as real estate salespersons, work under the supervision of brokers and can enter into agency relationships indirectly by working for a broker, it is the broker who ultimately has the legal authority to enter into these relationships directly with clients. This distinction is crucial, as it emphasizes the responsibility and authority of brokers in the real estate industry.