What to know about dual agency in real estate

What Is Dual Agency in Real Estate?

Imagine you’re buying a home, and the real estate agent representing you is also representing the seller. Sounds convenient, right? Well, that’s called dual agency, and while it has its perks, it also comes with some serious considerations.

Dual agency occurs when a single real estate agent (or brokerage) represents both the buyer and the seller in the same transaction. While this might seem like a streamlined approach, it introduces potential conflicts of interest that buyers and sellers should fully understand before proceeding.

How Does Dual Agency Work?

In a typical real estate transaction, each party has their own agent—one for the buyer, one for the seller. These agents negotiate on behalf of their clients to secure the best possible deal. But in a dual agency scenario, the same agent (or brokerage) acts as an intermediary between both parties.

Types of Dual Agency:

1. Single Agent Dual Agency: One agent represents both the buyer and seller.

2. Brokerage Dual Agency: Two different agents from the same brokerage represent the buyer and seller.

Is Dual Agency Legal?

Dual agency is not legal in all states due to the potential for conflicts of interest. Some states, like Alaska, Colorado, and Texas, have outright banned the practice. Others require full disclosure and written consent from both parties. If you’re considering dual agency, check your state’s laws to see if it’s allowed and under what conditions.

Pros and Cons of Dual Agency

✅ Pros of Dual Agency

• Streamlined Communication: With only one agent involved, communication can be more efficient.

• Faster Transactions: Since the same agent is handling both sides, deals may move more quickly.

• Potential Cost Savings: In some cases, a dual agent may be willing to negotiate a lower commission fee since they are handling both roles.

❌ Cons of Dual Agency

• Conflict of Interest: The agent is trying to serve two opposing interests simultaneously.

• Limited Negotiation: A dual agent cannot fully advocate for either party.

• Potential for Ethical Concerns: Some buyers and sellers worry about fairness, transparency, and whose best interests are truly being represented.

How to Protect Yourself in a Dual Agency Transaction

If you find yourself in a dual agency situation, here’s how to safeguard your interests:

✔ Get Everything in Writing: Make sure you fully understand the agent’s role and have a written agreement outlining their responsibilities. ✔ Ask Questions: How will the agent ensure fairness? How will they handle negotiations? ✔ Consider a Third-Party Advisor: Hiring a real estate attorney can help you navigate the process. ✔ Know Your Rights: Research state-specific regulations on dual agency.

When to Avoid Dual Agency

While dual agency can work in some cases, it may not be ideal if:

• You’re unfamiliar with the buying or selling process and need full representation.

• You want aggressive negotiation tactics.

• You feel uncomfortable with potential conflicts of interest.

Alternatives to Dual Agency

If you’re wary of dual agency but still want to work with a specific brokerage, consider designated agency instead. This means two separate agents from the same brokerage represent each party, reducing conflicts of interest while keeping transactions within the same firm.

The Bottom Line

Dual agency can simplify transactions but comes with inherent risks. Before agreeing to a dual agency arrangement, weigh the pros and cons, understand your rights, and consider whether it aligns with your best interests. When in doubt, consult a real estate attorney or seek independent representation to ensure you’re making the best decision for your financial future.

• National Association of Realtors (NAR)

• Investopedia

• Realtor.com

• U.S. Department of Housing and Urban Development (HUD)