Texas Agency & Intermediary Practice Questions

Every question explained

Prefer to study at your own pace? Here are all 20 questions. Read each one and pick your answer, then reveal the correct answer, the reasoning, and the trap that catches most candidates.

1. 1. A buyer and a seller in the same transaction are both represented by the same broker. Under Texas law, the broker may act as

   • A.a dual agent with written consent
   • B.an intermediary, with the written consent of both parties
   • C.a transaction broker
   • D.a single agent for both sides
   ▸Show answer and explanation

   Correct answer: B. an intermediary, with the written consent of both parties

   Why B is correct: Texas does not permit dual agency. When one broker represents both the buyer and the seller in the same transaction, the broker acts as an intermediary, which requires the written consent of both parties, typically obtained up front in the representation agreements.

   Trap: Texas does not allow dual agency and does not use the transaction broker. The correct concept is intermediary with written consent.

   Source: TRELA (Texas Occupations Code Ch. 1101.559-.561); intermediary

2. 2. Acting as an intermediary, a broker wants different associated license holders to advise the buyer and the seller separately. This is called

   • A.subagency
   • B.appointment of license holders by the broker
   • C.dual agency
   • D.designated escrow
   ▸Show answer and explanation

   Correct answer: B. appointment of license holders by the broker

   Why B is correct: An intermediary broker may appoint different associated license holders to communicate with, carry out instructions for, and advise each party. This appointment must be authorized in writing, and it lets each party receive advice while the broker remains the intermediary.

   Trap: Appointed license holders are still working under an intermediary, not as dual agents. The broker makes the appointments in writing.

   Source: TRELA (Texas Occupations Code Ch. 1101.560); appointments

3. 3. When must a Texas license holder provide the Information About Brokerage Services (IABS) notice?

   • A.Only at closing
   • B.At the first substantive communication with a party about a specific property
   • C.Within 30 days after a sale
   • D.Never, unless the party asks
   ▸Show answer and explanation

   Correct answer: B. At the first substantive communication with a party about a specific property

   Why B is correct: A license holder must provide the TREC Information About Brokerage Services (IABS) notice at the first substantive communication with a party regarding a specific property. It explains the types of representation available in Texas.

   Trap: The IABS is given at the first substantive communication, not at closing. It is a disclosure, not a representation agreement.

   Source: TRELA (Texas Occupations Code Ch. 1101.558); IABS notice

4. 4. A sales agent in Texas may lawfully perform brokerage activities only

   • A.after passing the exam, with no further requirement
   • B.while sponsored by an active Texas broker who supervises the agent
   • C.as an independent contractor with no broker
   • D.if the agent also holds an appraiser license
   ▸Show answer and explanation

   Correct answer: B. while sponsored by an active Texas broker who supervises the agent

   Why B is correct: A licensed sales agent may not engage or attempt to engage in real estate brokerage unless sponsored by a licensed broker and acting for that broker. Holding the license is not enough on its own, and neither is passing the exam: an applicant may not act until the license is actually issued.

   Trap: Passing the exam is not enough. A sales agent needs the license issued and an active sponsoring broker to act for.

   Source: TRELA §1101.351(b)-(c)

5. 5. A grateful seller hands a sales agent a $500 cash bonus at closing. The sales agent may

   • A.accept it directly because it is a gift
   • B.accept it directly if it is under $1,000
   • C.not accept it directly; compensation for brokerage must flow through the sponsoring broker
   • D.accept it if disclosed to the broker within ten days
   ▸Show answer and explanation

   Correct answer: C. not accept it directly; compensation for brokerage must flow through the sponsoring broker

   Why C is correct: A Texas sales agent may receive transaction compensation only from the sponsoring broker, or from the broker who sponsored the agent when the compensation was earned. The agent cannot accept it directly from a buyer, seller, or another broker. Calling it a gift does not change the rule.

   Trap: The sponsoring broker is the permitted source of a sales agent's transaction compensation. A direct client payment, gift or not, is a violation.

   Source: TRELA §1101.651(b); a sales agent may accept compensation only from the sponsoring broker

6. 6. A broker who acts as an intermediary

   • A.may favor the buyer because the buyer pays the commission
   • B.may not disclose one party's confidential price information to the other without authorization, and must treat the parties fairly
   • C.owes full fiduciary loyalty to the seller only
   • D.must withdraw from the transaction
   ▸Show answer and explanation

   Correct answer: B. may not disclose one party's confidential price information to the other without authorization, and must treat the parties fairly

   Why B is correct: An intermediary must act fairly and may not favor one party over the other. Without the required separate writing, the intermediary may not disclose that the seller will take less than the asking price, that the buyer will pay more than the price submitted in a written offer, or other protected information.

   Trap: An intermediary stays neutral. It cannot leak one party's bottom line to the other without written authorization.

   Source: TRELA §1101.559(c), fair and impartial conduct; §1101.651(d), prohibited disclosures

7. 7. Under TREC rules, a broker is responsible for

   • A.only the broker's own transactions
   • B.the real estate brokerage activities of the sales agents sponsored by the broker
   • C.nothing an agent does after hours
   • D.the personal taxes of each sponsored agent
   ▸Show answer and explanation

   Correct answer: B. the real estate brokerage activities of the sales agents sponsored by the broker

   Why B is correct: The broker must notify each sponsored sales agent in writing of the scope of that agent's authorized activities, and is responsible for those authorized acts. Note what the rule does NOT say: the broker is not required to supervise sales agents directly. If the broker permits an agent to act beyond the authorized scope, those acts are the broker's responsibility too.

   Trap: The rule expressly says the broker is not required to supervise directly. Responsibility follows the authorized scope, and any conduct beyond it the broker permits, not a duty of constant oversight.

   Source: 22 TAC §535.2(a), (e); TRELA §1101.803

8. 8. An unlicensed assistant working for a brokerage may

   • A.negotiate contract terms with buyers
   • B.perform clerical and administrative tasks but not activities that require a license
   • C.show homes and solicit listings
   • D.be paid directly by clients for brokerage work
   ▸Show answer and explanation

   Correct answer: B. perform clerical and administrative tasks but not activities that require a license

   Why B is correct: Clerical and administrative employees, identified to callers as such, may confirm the size, price, and terms of advertised property without a license. They may not do the acts the rules reserve to license holders: showing property, which expressly includes unlocking or providing access and hosting an open house, and soliciting or negotiating listings.

   Trap: The line is not the subject matter, it is the act. Confirming an advertised price is clerical; opening the door for a prospect is showing, and showing requires a license.

   Source: 22 TAC §535.5(g), §535.4(c), (f); TRELA §1101.351(a)

9. 9. A license holder from outside the listing brokerage hosts an open house and does not represent the owner. A visitor already has a written agreement with another broker. Before showing the home, the host must

   • A.do nothing because the visitor is already represented
   • B.provide IABS and enter the written agreement required by §1101.563
   • C.provide IABS only after the visitor finishes viewing the home
   • D.become the visitor's exclusive buyer agent
   ▸Show answer and explanation

   Correct answer: B. provide IABS and enter the written agreement required by §1101.563

   Why B is correct: Under §1101.562(b), a host whose broker does not represent the owner provides the IABS notice before showing. Because the visitor is a prospective residential buyer, §1101.563 also requires a written agreement before the showing. TREC's 2026 guidance says this outcome applies even when the visitor already has a written representation agreement with another broker.

   Trap: The words open house and already represented both point toward §1101.558(c) exceptions, but the newer pre-showing provisions add separate duties. Identify whether the host's broker represents the owner.

   Source: TRELA §1101.562(b), §1101.563; TREC 2026 buyer and tenant representation guidance

10. 10. A license holder represents the seller. To the unrepresented buyer (a customer), the license holder owes

    • A.the full fiduciary duties owed to a client
    • B.honesty, fair dealing, and disclosure of known material defects
    • C.no duties at all
    • D.a duty to negotiate the lowest price for the buyer
    ▸Show answer and explanation

    Correct answer: B. honesty, fair dealing, and disclosure of known material defects

    Why B is correct: TREC Rule 535.156(b) draws the line in one sentence: a license holder must deal honestly and fairly with all parties, but represents only the principal and owes a duty of fidelity to that principal. Rule 535.156(d) adds a duty to convey accurate information to members of the public the license holder deals with. Failing to disclose to a potential buyer a known significant defect, including a latent structural defect, is separately a ground for discipline.

    Trap: Customers get honesty, fair dealing, and defect disclosure, not fidelity. The duty of fidelity runs only to the principal.

    Source: 22 TAC §535.156(b), (d); TRELA §1101.652(b)(3)-(4), (b)(7); §1101.557(a)

11. 11. The written consent that authorizes a broker to act as an intermediary is usually obtained

    • A.verbally at closing
    • B.up front in the listing agreement and the buyer-representation agreement
    • C.only after the parties dispute
    • D.from TREC before each transaction
    ▸Show answer and explanation

    Correct answer: B. up front in the listing agreement and the buyer-representation agreement

    Why B is correct: The written consent to intermediary status is normally built into the listing agreement and the buyer-representation agreement, which authorize the broker to act as intermediary if the same firm ends up on both sides of a transaction.

    Trap: Intermediary consent is set up in the representation agreements in advance, in writing, not arranged verbally at the last minute.

    Source: TRELA §1101.559; intermediary consent

12. 12. A broker acting as an intermediary may NOT, without written authorization,

    • A.disclose that a party will accept a price different from the one offered
    • B.treat both parties fairly
    • C.hold earnest money in trust
    • D.provide each party the IABS notice
    ▸Show answer and explanation

    Correct answer: A. disclose that a party will accept a price different from the one offered

    Why A is correct: An intermediary may not disclose that a party will accept a price or terms different from those offered, and may not reveal confidential information, unless the party authorizes it in writing. The intermediary must still disclose known material defects about the property.

    Trap: An intermediary cannot leak a party's bottom line. Property-condition facts, however, are not confidential.

    Source: TRELA §1101.651(d), prohibited intermediary disclosures; §1101.559(c), fair and impartial conduct

13. 13. When a broker makes appointments in an intermediary transaction, the broker may

    • A.appoint the same license holder to both the buyer and the seller
    • B.appoint a different license holder to each party but never the same one to both
    • C.appoint only unlicensed assistants
    • D.skip the parties' written consent
    ▸Show answer and explanation

    Correct answer: B. appoint a different license holder to each party but never the same one to both

    Why B is correct: If the written consent authorizes appointments, the broker may appoint one associated license holder to advise the buyer and a different one to advise the seller. The broker may never appoint the same license holder to both parties.

    Trap: Appointments split advice between two different license holders. One person cannot be appointed to both sides.

    Source: TRELA §1101.560; appointments

14. 14. A buyer signs a buyer-representation agreement with a broker. The broker now owes the buyer

    • A.only honesty and fair dealing
    • B.the full fiduciary duties of a client relationship
    • C.no duties until closing
    • D.duties only to the seller
    ▸Show answer and explanation

    Correct answer: B. the full fiduciary duties of a client relationship

    Why B is correct: A broker who represents a party is that party's agent. TREC Rule 535.2(b) says a broker owes the principal the highest fiduciary obligation and must convey all information known to the agent that may affect the principal's decision, and Rule 535.156(a)-(c) requires the license holder to put the principal's interest above their own and keep the principal informed. The statute adds a floor the broker cannot go below: inform the party of material information received, answer the party's questions, and present any offer to or from the party. The familiar OLD CAR duties come from common-law agency; these are what Texas puts in writing.

    Trap: A signed representation agreement turns the buyer into a principal owed the highest fiduciary obligation, not just honesty and fair dealing.

    Source: 22 TAC §535.2(b), §535.156(a)-(c); TRELA §1101.557(a), (b)(2)-(3)

15. 15. Even when no representation agreement exists, a Texas license holder must

    • A.conceal known defects to help the seller
    • B.disclose a known material defect about the property
    • C.refuse to speak to unrepresented parties
    • D.guarantee the property's value
    ▸Show answer and explanation

    Correct answer: B. disclose a known material defect about the property

    Why B is correct: Failing to disclose to a potential buyer a known significant defect, including a latent structural defect, is a ground for discipline. The statute keys that duty to the potential buyer, not to whether that buyer is a client, so no representation agreement is needed to trigger it. TREC Rule 535.156(b) and (d) point the same way: deal honestly and fairly with all parties, and convey accurate information to members of the public.

    Trap: Defect disclosure does not depend on agency. It is owed to a potential buyer the license holder does not represent.

    Source: TRELA §1101.652(b)(4) (defect defined in (b)(3)); 22 TAC §535.156(b), (d)

16. 16. A license holder delivers the IABS notice to a prospective buyer at their first substantive communication about a specific property. What has the notice accomplished?

    • A.It made the buyer a client of the broker
    • B.It created an intermediary relationship
    • C.It informed the buyer how a broker can represent a party; it did not create representation
    • D.It satisfied the written agreement required before showing residential property
    ▸Show answer and explanation

    Correct answer: C. It informed the buyer how a broker can represent a party; it did not create representation

    Why C is correct: The IABS notice is a disclosure. It describes the ways a broker can represent a party, the duties owed, and the license holder's contact details. It does not create agency. Representation turns on the parties' agreement and conduct, while §1101.563 separately requires a written agreement for specified residential-buyer activity.

    Trap: Delivering IABS never converts anyone into a client, and it is a separate obligation from the written agreement required before showing residential property.

    Source: TRELA §1101.558(b-1); representation disclosure

17. 17. A broker represents a seller under an exclusive listing. An offer arrives while the seller is on holiday and the broker believes it is far too low. The broker must

    • A.hold the offer until the seller returns
    • B.reject the offer on the seller's behalf because it is unreasonable
    • C.present the offer to the seller
    • D.counter the offer using the broker's own judgment
    ▸Show answer and explanation

    Correct answer: C. present the offer to the seller

    Why C is correct: Under TRELA §1101.557(b), a broker who represents a party must inform the party of material information related to the transaction, including the receipt of an offer, and shall at a minimum answer the party's questions and present any offer to or from the party.

    Trap: The broker's opinion of the offer is irrelevant. Screening or withholding an offer is exactly what the minimum-services rule forbids.

    Source: TRELA §1101.557(b)(2)-(3); minimum services

18. 18. A sales agent's relationship with their sponsoring broker ends. Which statement is correct?

    • A.The sales agent may continue working while finding a new broker
    • B.The terminating party must immediately notify the other party and TREC in writing, and the license goes on inactive status
    • C.Only the broker may notify TREC, and only at renewal
    • D.The sales agent's license is revoked automatically
    ▸Show answer and explanation

    Correct answer: B. The terminating party must immediately notify the other party and TREC in writing, and the license goes on inactive status

    Why B is correct: Under TRELA §1101.367(a), when the relationship terminates the terminating party shall immediately notify in writing both the other party and the Commission, and on receiving that notice the Commission places the sales agent license on inactive status. The agent may not act as a sales agent until a broker assumes sponsorship.

    Trap: There is no grace period for continuing to work. Inactive status is not revocation either, because sponsorship can be resumed.

    Source: TRELA §1101.367(a); sponsorship termination

19. 19. A broker delegates day-to-day supervision of several sales agents to an experienced associate. One of those agents mishandles a transaction and the broker never knew about it. Who is responsible?

    • A.The delegated supervisor alone, because supervision was assigned to them
    • B.The sales agent alone, because the broker had no knowledge
    • C.Nobody, because the broker acted reasonably in delegating
    • D.The broker remains responsible, and the sales agent is still accountable for their own conduct
    ▸Show answer and explanation

    Correct answer: D. The broker remains responsible, and the sales agent is still accountable for their own conduct

    Why D is correct: TRELA §1101.803 makes a broker liable to the Commission, the public, and the broker's clients for conduct engaged in under Chapter 1101 by a sales agent associated with or acting for the broker. Supervisory duties can be delegated; the responsibility cannot, and the statute contains no knowledge requirement.

    Trap: Both over-corrections are wrong. Responsibility reaching the broker does not remove the sales agent's own accountability, and lack of knowledge is not a defense.

    Source: TRELA §1101.803; general liability of broker

20. 20. An unlicensed assistant answers the brokerage phone. A caller asks how many bedrooms a listing has, and then asks whether it is priced well. The assistant may

    • A.answer neither question
    • B.answer both, because the information is publicly available
    • C.state the bedroom count from the listing, but not offer an opinion on price
    • D.answer both, provided the sponsoring broker approved it in writing
    ▸Show answer and explanation

    Correct answer: C. state the bedroom count from the listing, but not offer an opinion on price

    Why C is correct: Repeating factual information already published in a listing is clerical. Offering an opinion on value or negotiating terms is an act requiring a license, and no amount of broker approval can authorize an unlicensed person to perform it.

    Trap: The line is not who is speaking but what is being provided. Assuming an unlicensed assistant may say nothing at all is the opposite error.

    Source: TRELA §1101.002(1), §1101.351; acts requiring a license