Wisconsin Real Estate Sales Practice Exam

What relationship exists between a buyer and their agent during a property purchase?

1. Client and customer

2. Partner and manager

3. Buyer and seller

4. Principal and agent

The correct answer is: Principal and agent

The relationship between a buyer and their agent during a property purchase is best described as a principal and agent relationship. In this context, the buyer is considered the principal, who appoints an agent to act on their behalf in the transaction. The agent has a fiduciary duty to the buyer, which includes responsibilities such as loyalty, disclosure, confidentiality, obedience, and accounting. This legal relationship establishes that the agent is obligated to represent the best interests of the buyer throughout the home buying process. The other options do not accurately reflect the nature of this relationship. For instance, client and customer suggest a transactional interaction but do not fully encapsulate the fiduciary duties owed. Similarly, partner and manager imply a business partnership that does not match the dynamics of a real estate transaction, where one party represents the interests of another. Referring to buyer and seller denotes the opposing sides of a transaction, rather than the specific relationship pertinent to the buyer's engagement with their agent. Thus, principal and agent clearly defines the legal and ethical responsibilities that exist in this context.