Which statement is true regarding who pays the commission and which party the agent represents?

Which statement is true regarding who pays the commission and which party the agent represents?

• A. The party who pays the commission always dictates the representation.
• B. The party who pays the commission dictates representation only in exclusive arrangements.
• C. The party who pays the commission must always control negotiations.
• D. The party who pays the commission does not necessarily dictate the agent's representation.

Answer: (D)

The key idea is that who pays the commission does not automatically determine who an agent represents. Agency relationships are created by signed agreements and disclosures, such as a listing agreement for the seller or a buyer representation agreement for the buyer. In typical transactions, the seller pays the commission, but the listing agent’s fiduciary duties are to the seller and the buyer’s agent’s duties are to the buyer. The possibility of dual agency exists when one broker represents both sides, but even then representation is defined by the agreements and disclosures, not simply by who pays the commission. So the party paying the commission does not necessarily dictate the agent’s representation.

The key idea is that who pays the commission does not automatically determine who an agent represents. Agency relationships are created by signed agreements and disclosures, such as a listing agreement for the seller or a buyer representation agreement for the buyer. In typical transactions, the seller pays the commission, but the listing agent’s fiduciary duties are to the seller and the buyer’s agent’s duties are to the buyer. The possibility of dual agency exists when one broker represents both sides, but even then representation is defined by the agreements and disclosures, not simply by who pays the commission. So the party paying the commission does not necessarily dictate the agent’s representation.