Quick answer
An agent owes a client loyalty, obedience to lawful instructions, confidentiality, accounting, and reasonable skill and care. Everyone else in the transaction gets honesty and disclosure of known material facts. Almost every agency question on the exam turns on which of those two lists applies to the person in the scenario.
Fiduciary duties carry more weight on the real estate exam than almost anything else. Agency is 13 percent of the national portion, more than any topic except contracts. It also runs through the Georgia supplement under BRRETA, so the concepts get tested twice with slightly different rules attached. Learning the national frame first makes the Georgia layer much easier.
The duties, and what each one actually forbids
Study guides list the duties as nouns. The exam tests them as prohibitions, so it helps to learn them that way.
Loyalty. Put the client's interest ahead of your own and everyone else's. What it forbids: buying the client's listing yourself without disclosure, steering a client toward the deal that pays you more, or letting your own commission drive the advice.
Obedience. Follow the client's lawful instructions. What it forbids: substituting your judgment for theirs on price or terms. What it does not require: following an unlawful instruction. A seller who tells you not to show the property to a particular group has given an instruction you must refuse.
Confidentiality. Keep what the client tells you in confidence, and keep it after the relationship ends. What it forbids: telling a buyer that the seller will take less. This one survives the closing.
Accounting. Account for all money and documents. What it forbids: everything in the trust account rules.
Reasonable skill and care. Do the job competently. What it forbids: guessing at answers outside your expertise instead of referring the client to someone qualified.
Exam trap
Confidentiality and disclosure look like they conflict, and the exam builds questions in that gap. They do not conflict, because they cover different things. You keep the client's negotiating position confidential. You disclose material facts about the property to everyone. A seller telling you the basement floods is a material fact, not a confidence.
How agency is created
Four routes, and the exam wants you to recognise the accidental ones.
- Express agreement, written or in some states oral. In Georgia a client relationship requires a written brokerage engagement.
- Implied by conduct, where the parties behave like principal and agent even though nobody signed anything.
- Ratification, where a principal accepts the benefit of an act performed without authority and thereby approves it.
- Estoppel, where a principal's own conduct led a third party to reasonably believe an agency existed, and the principal is not allowed to deny it.
The last two exist mainly to catch people. A broker who lets a licensee hold themselves out as representing the firm cannot later say they had no authority.
Terminating it
An agency ends by performance, expiration, mutual agreement, revocation by the principal, renunciation by the agent, or operation of law, which covers death, incapacity, bankruptcy and destruction of the property.
Two points the exam likes:
Revocation is usually possible but is not always free. A principal can fire an agent and still owe damages for breach of the contract that created the agency.
Confidentiality does not end with the agency. The other duties do.
Material facts and the puffing line
The disclosure duty covers facts that would affect a reasonable person's decision. Physical defects, pending assessments, a failed septic system, a boundary dispute.
Puffing is opinion stated as enthusiasm: best view in the county, a wonderful home for a family. It is not actionable because nobody could reasonably rely on it as fact.
The line sits at verifiability. "This is a great neighbourhood" is puffing. "This house has never flooded" is a statement of fact, and if it is untrue and you knew, it is misrepresentation. Saying it while not knowing either way is negligent misrepresentation, which is still a problem.
Worth knowing
Fraud requires intent. Negligent misrepresentation does not. An agent who repeats what the seller told them without checking, on a point they should have checked, can be liable even with clean intentions.
The glossary entries for client and customer carry the Georgia wording, and the practice sets by topic will keep serving agency scenarios until the duty lists separate cleanly in your head.
Check yourself
1. A seller tells their listing agent that they will accept $20,000 below asking price if a full-price offer does not arrive within a month. May the agent share this with a buyer?
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Answer: C. The seller's negotiating position is confidential. The duty holds regardless of the buyer's status and it survives the end of the relationship.
2. A listing agent learns from the seller that the roof leaks during heavy rain. The seller asks the agent to keep it quiet. What must the agent do?
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Answer: B. Obedience covers lawful instructions. Concealing a known material defect is not lawful, and the duty to disclose material facts runs to everyone.
3. A principal accepts the benefit of a contract negotiated by someone who had no authority to act for them. What has occurred?
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Answer: B. Accepting the benefit of an unauthorised act approves it after the fact, which is ratification.
4. Which statement is puffing rather than misrepresentation?
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Answer: B. An opinion nobody could reasonably rely on as fact is puffing. The other three are verifiable statements of fact.
FAQ
Who is the principal, the client or the customer?
The client. The principal is the person the agent represents. A customer is someone the agent deals with honestly but does not represent.
Is the buyer's agent an agent of the seller because the seller pays the commission?
No. Compensation does not determine agency. Representation follows the agreement, and a buyer's agent paid from the seller's proceeds still represents the buyer.
Does the duty of confidentiality really last forever?
It survives the end of the relationship, which for exam purposes means treat it as permanent. The other duties end when the agency does.
How does this differ in Georgia?
Georgia layers BRRETA on top: a written brokerage engagement creates the client relationship, ministerial acts for a customer do not create agency, and dual agency requires written consent. The Georgia agency guide covers those rules.