Iowa Real Estate Practice Exam

In a situation where a buyer's agent demands a higher commission than originally stated, what is a necessary condition for this demand to be legitimate?

1. Written consent from the buyer

2. Seller’s verbal agreement

3. Prior written consent from the listing agent

4. Approval from the buyer’s attorney

The correct answer is: Prior written consent from the listing agent

For a buyer's agent to legitimately demand a higher commission than originally agreed upon, it is essential to have prior written consent from the listing agent. This is because real estate transactions often involve agreements between multiple parties, including the buyer's agent and the listing (seller's) agent. The listing agent typically has a commission agreement in place with the seller, which includes the commission amount to be shared with the buyer's agent. If the buyer's agent seeks to receive a higher commission than what was initially established, the change affects the financial agreement made with the seller. Therefore, having prior written consent from the listing agent ensures that all parties are in agreement and that the seller is aware and supportive of the increased commission. It protects against potential disputes and establishes a clear understanding regarding compensation. This necessity is rooted in maintaining transparency and professionalism within the real estate process, ensuring that all agents are aligned with the commission structure, and preventing misunderstandings that could compromise the transaction.