Iowa Real Estate Practice Exam

If a broker is representing the seller, what must they inform prospective buyers when showing a property?

1. The property is under contract

2. The listing price is negotiable

3. The company represents the seller's interest

4. The seller's financial situation

The correct answer is: The company represents the seller's interest

When a broker is representing the seller, it is essential for them to inform prospective buyers that the company represents the seller's interest. This transparency is important in establishing trust and ensuring that all parties understand the nature of the relationship. Brokers have a fiduciary duty to their clients, which in this case means prioritizing the seller's needs and goals throughout the transaction. Informing buyers of this representation helps clarify that the broker's primary obligation is to the seller, which affects how they communicate and negotiate on behalf of the seller. The importance of this requirement lies in promoting fair dealings and preventing misunderstandings. It also aligns with ethical practices in real estate, as both parties should be aware of who the broker is working for, which ultimately influences how the broker handles offers, disclosures, and negotiations. Regarding the other choices, while it might be useful information to share, they don't carry the same necessity or legal obligation as disclosing the representation. For example, whether the property is under contract or the listing price is negotiable are situational and could change frequently. Discussions regarding the seller's financial situation are personal and confidential, and not typically necessary to disclose to prospective buyers in the context of representation.