What background knowledge is needed for this Agency question?

The confusion about commission source and agency representation has deep historical roots: for most of the 20th century, all real estate agents were technically sub-agents of the seller because sellers paid all commissions, creating an industry-wide undisclosed dual agency problem. The agency reform movement of the 1980s and 1990s, which influenced Oregon's ORS 696.800–696.890, explicitly decoupled commission payment from agency representation, establishing that a buyer's agent can be compensated through the seller's proceeds without that compensation creating a conflict of agency.

What is a good way to remember the answer to this Agency question?

Use the 'Two Flags' visualization: in a co-brokerage transaction, each agent plants their own flag in the ground on their client's side of the negotiating table. Lisa's flag says 'Alex' and the listing broker's flag says 'Seller.' Two flags, two brokerages, two separate representations—no disclosed limited agency needed. Disclosed limited agency only happens when one person tries to hold both flags at the same time.

What exam tip applies to this Agency question?

For questions involving commission payment and agency, immediately remind yourself that in modern Oregon law, who pays the commission does not determine who the agent represents. Focus instead on the question: is the same licensee or the same brokerage representing both the buyer and the seller? If yes, disclosed limited agency is required. If two different brokerages are involved, it is simply co-brokerage with each agent representing their own client, and no special consent form is needed.

How does this Agency concept apply in real world practice?

Lisa, affiliated with Portland Buyer's Realty, has a signed buyer's agency agreement with Alex. They find a home listed by Pacific Coast Listings, a completely separate brokerage. The listing broker offers a 2.5% cooperative commission through the MLS to Lisa's brokerage. Lisa writes an offer for Alex, negotiates aggressively on price and terms, and advocates fully for Alex's interests—all while being compensated from the seller's proceeds at closing. This is a clean co-brokerage transaction with no disclosed limited agency required.

AgencyAgency_types_sellers_buyers_disclosed_limitedMEDIUM

Oregon broker Lisa enters into a written buyer's agency agreement with purchaser Alex. Lisa shows Alex a property listed by a different brokerage. The listing broker, working for the seller, offers to cooperate and pay a buyer's agent commission through the MLS. Which statement accurately describes the agency relationships in this transaction under Oregon law?

Correct Answer

A) Lisa represents Alex as a buyer's agent, and the listing broker represents the seller; each party has their own agent with no disclosed limited agency required

Under ORS 696.800–696.890, when two different brokerages are involved—one representing the seller and one representing the buyer—this is a straightforward co-brokerage transaction. Each licensee represents their own client. Lisa is Alex's buyer's agent, and the listing broker is the seller's agent. There is no disclosed limited agency because no single licensee (or brokerage) is representing both parties. Disclosed limited agency is only triggered when the same licensee or brokerage represents both buyer and seller.

Answer Options

Lisa represents Alex as a buyer's agent, and the listing broker represents the seller; each party has their own agent with no disclosed limited agency required

Lisa represents Alex as a buyer's agent, and the listing broker represents the seller; this is a disclosed limited agency situation requiring written consent

Because the listing broker is paying Lisa's commission, Lisa actually represents the seller and owes Alex only customer-level duties

Lisa and the listing broker are both considered disclosed limited agents because they work in the same MLS system

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Related Concepts

Designated Agency

An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.

Dual Agency

A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.

Express Agency

An agency relationship created by a clear, explicit agreement between the principal and agent, either orally or in writing.

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