Humber/Ontario Real Estate Course 4 Exam Practice

Which statement is true regarding multiple representation in real estate transactions?

1. Has inherent risks due to conflicting client interests.

2. Is legally simple to manage.

3. Makes buyer and seller negotiations less competitive.

4. Only involves the same salesperson with both buyer and seller clients.

5. Requires conflict disclosure forms signed by involved parties.

6. Is prohibited by REBBA standards.

The correct answer is: Has inherent risks due to conflicting client interests.

The statement regarding multiple representation in real estate transactions that is true highlights the inherent risks associated with conflicting client interests. In scenarios where a real estate professional represents both the buyer and the seller, there is a significant risk that the interests of one party may conflict with those of the other. This dynamic can create challenges for the agent in providing unbiased advice and can lead to ethical dilemmas if not handled properly. The complexity of navigating these conflicting interests emphasizes the need for transparency and strong communication between all parties involved. While there are guidelines and regulations concerning multiple representation, these situations require rigorous management and careful consideration to ensure fairness and that all parties' interests are adequately represented. Understanding these risks is crucial for real estate professionals to maintain ethical standards and comply with regulations, thus emphasizing the critical nature of the correct answer.