PSI Virginia Real Estate Practice Exam

In what situation must a brokerage agreement be in writing?

1. For any non-exclusive services provided

2. All exclusive brokerage agreements

3. All verbal agreements

4. Only agreements requiring a commission

The correct answer is: All exclusive brokerage agreements

A brokerage agreement must be in writing for all exclusive brokerage agreements because these agreements create a legally binding relationship between the broker and the client. The written format provides a clear and detailed record of the terms and conditions agreed upon by both parties, including the nature of the services, commission fees, and the duration of the agreement. This requirement is in place to protect both the broker and the client, ensuring that there is transparency and understanding of the responsibilities and expectations involved. While verbal agreements can exist, they are often harder to enforce and can lead to misunderstandings. Non-exclusive services do not typically necessitate a written agreement because they imply that the client may work with multiple brokers simultaneously, which does not bind the parties in the same way as an exclusive arrangement. Moreover, not every agreement that requires a commission necessitates being in writing unless it is classified as exclusive. Therefore, the requirement for a written agreement specifically ties to exclusive agreements to maintain clarity and legal adherence in the real estate transaction.