California Real Estate Broker ExaminationAgencyMedium
A real estate broker is representing a buyer. The buyer instructs the broker to submit an offer for a property at a price significantly below market value, stating they are testing the seller's motivation. The broker believes this offer has little chance of acceptance and could potentially deter the seller from considering future, more reasonable offers from their client. What is the broker's primary duty in this situation?
- ATo refuse to submit the offer, as it is unlikely to be accepted.
- BTo disclose to the seller that the buyer is testing their motivation.
- CTo advise the buyer to make a more reasonable offer that aligns with market conditions.
- DTo submit the offer as instructed by the buyer, even if it seems unreasonable.
Show answer & explanationAnswer & explanation
Correct answer: D. To submit the offer as instructed by the buyer, even if it seems unreasonable.
The duty of obedience requires an agent to follow all lawful instructions of their principal, even if the agent believes the instructions are not in the principal's best interest. The broker must submit the offer as directed.
Why the other options are wrong
- A. Refusing to submit a lawful offer would be a breach of the duty of obedience.
- B. Disclosing the buyer's motivation to the seller would be a breach of the duty of confidentiality.
- C. Advising is part of reasonable care, but obedience to lawful instructions takes precedence.
Duty of Obedience
An agent's fiduciary duty to obey all lawful instructions of their principal, provided those instructions do not violate laws or ethical standards.
- Agent must follow principal's lawful directions.
- Applies even if agent disagrees with the instruction.
- Does not compel agent to violate laws or ethics.
Memory trick: OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.