Dual agency is when the same real estate agent represents the buyer and the seller in the same home purchase transaction.

Understanding Dual Agency

Dual agency is a real estate scenario where the same real estate agent represents both parties.

Dual agency can simplify communication and negotiations in a purchase because one agent handles all aspects of the deal. However, many states have laws against dual agency because it may not protect consumers. A real estate agent can't advocate for both parties equally in a transaction.

For instance, a home seller typically wants the highest price for their home, while a home buyer wants to pay the least amount possible. Therefore, a real estate agent cannot represent both parties fairly in such a situation.

Legal Status of Dual Agency

States that prohibit dual agency include Colorado, Florida, Kansas, and Wyoming. In these states, real estate agents may represent only one party in a real estate transaction to ensure fiduciary duty— the obligation to act in their client's best interest.

In states where dual agency is allowed, it must be disclosed to and agreed upon by both the buyer and seller.

Dual Agency: A Real World Example

Imagine

Imagine you're a first-time home buyer who just found your dream home. You call a real estate agent to help you make an offer on a home and soon discover that the agent represents the seller of the same property.

Typically, a buyer's agent is solely focused on getting the best deal for the buyer. But in this situation, because the agent represents the seller, too, their duty is split. Their job to get the seller the highest possible price directly conflicts with the buyer's interest in paying the lowest price.

The buyer may question whether a real estate agent can truly advocate for the best interests of both parties and rightly conclude that they cannot.

The buyer finds their own real estate representation—an agent focused on advocating for their interests, guiding them through the home buying process, and helping secure the best deal on a home.

Common Questions About Dual Agency

Where is dual agency not legal?

Dual agency is not legal in all states. Multiple states, including Colorado, Florida, Kansas, and Wyoming, prohibit it due to potential conflicts of interest.

How do I know if I'm in a dual agency situation?

Real estate agents are legally required to disclose if they are in a dual-agency situation. They must inform both the buyer and seller and obtain consent from both parties.

Can dual agency save me money?

Dual agency might save on commission fees since one agent handles both sides of the transaction. However, any potential savings should be weighed against the conflicts of interest that may arise.

Is dual agency the same as a transaction broker?

No, they are different. A transaction broker facilitates a transaction without representing either party, while a dual agent represents both parties in the same transaction.

What should I do if I'm uncomfortable with dual agency?

If you're uncomfortable with dual agency, you can seek separate representation to ensure your interests are fully advocated for.

What are the risks of dual agency for a buyer?

For a buyer, the primary risk of dual agency is that the agent may not be able to negotiate the best price or terms because they must also represent the seller's interests. This can result in less favorable outcomes for the buyer.

Can a dual agent give me advice on how much to offer?

A dual agent must remain neutral and cannot provide guidance that favors one party over the other. They may not be able to suggest an offer amount that aligns solely with your interests as a buyer.

What if I find a conflict of interest after signing a dual agency agreement?

If you discover a conflict of interest after signing a dual agency agreement, you may discuss your concerns with the agent or seek independent representation to protect your interests.