Iowa Real Estate Practice Exam

In a dual agency scenario, when can a broker collect commissions from both parties?

1. When the buyer is a repeat client

2. If both parties give prior written consent

3. When the seller agrees verbally

4. Only when the property is less than six months old

The correct answer is: If both parties give prior written consent

In a dual agency scenario, a broker can collect commissions from both parties if both parties give prior written consent. This principle is grounded in the requirement for transparency and the need to avoid conflicts of interest. Dual agency occurs when a broker represents both the buyer and the seller in the same transaction, which creates a potential conflict because the broker must navigate representing the interests of both parties simultaneously. For the broker to ethically collect commissions from both the buyer and seller, it is vital that each party is fully informed about the broker's role and consents to it in writing. This consent protects the interests of both parties and helps ensure that they are aware of any potential conflicts that may arise. It also aligns with legal requirements in many jurisdictions, including Iowa, where clear communication and informed consent are fundamental to maintaining ethical real estate practices. Other options do not establish a legally or ethically sound basis for dual agency commission collection. For example, repeat clients may not inherently signify informed consent, while verbal agreements typically do not hold the same weight as written consent in legal contexts. Furthermore, the age of the property has no bearing on the legality or ethical considerations surrounding dual agency and commission collection. Therefore, the requirement for both parties to provide prior written consent is the correct and necessary condition