Real Estate Council of Alberta Fundamentals Practice Exam

What is a key element of a designated agency?

1. It allows clients to trade without mutual consent

2. It creates a competition between designated agents

3. It helps to avoid conflicts of interest

4. It requires no written agreement

The correct answer is: It helps to avoid conflicts of interest

A key element of a designated agency is that it helps to avoid conflicts of interest. In a designated agency, a real estate brokerage designates specific agents to represent individual clients, which allows those clients to have their interests prioritized without interference from other agents within the same brokerage. This structure is particularly important in situations where a brokerage is representing both a buyer and a seller in a transaction. By designating separate agents for each client, designated agency minimizes the potential for conflicts of interest that could arise if one agent were to represent both parties. As a result, clients can feel more secure that their interests are being fully represented. The other options either misinterpret the concept of designated agency or introduce elements that do not align with its fundamental purpose. For instance, designated agency does not allow clients to trade without mutual consent, and it doesn't inherently create competition between designated agents; rather, it emphasizes collaboration within the confines of client confidentiality. Lastly, designated agency typically involves a written agreement to outline the terms of the agency relationship, which contradicts the notion of requiring no written agreement.