PSI Virginia Real Estate Practice Exam

What defines a brokerage relationship?

1. A casual agreement between buyers and sellers

2. The contractual relationship between a client and a licensee

3. A temporary arrangement for a single transaction

4. The fees charged by the brokerage firm

The correct answer is: The contractual relationship between a client and a licensee

A brokerage relationship is defined as the contractual relationship between a client and a licensee. This definition is foundational in real estate as it establishes the formal connection in which the licensee (the agent or broker) represents the interests of the client (the buyer or seller). This relationship is governed by laws and regulations, which require brokers to perform specific duties, including loyalty and full disclosure, within the context of that agreement. In contrast to this concept, the other options do not accurately capture the essence of a brokerage relationship. A casual agreement does not possess the legal binding nature or the formalities typically involved in real estate transactions. A temporary arrangement for a single transaction lacks the depth and long-term responsibilities often associated with brokerage relationships, which can include ongoing interactions and support. Furthermore, while fees charged by the brokerage firm are an important aspect of real estate transactions, they do not define the relationship itself; rather, they are the financial aspect of the services provided in that contractual relationship.