Dual Agency
Dual agency occurs when a single real estate agent or brokerage represents both the buyer and seller in the same transaction, creating a potential conflict of interest that requires disclosure and consent.
Exam Tip
Dual agency = same agent represents BOTH parties. Requires written consent. Creates conflict of interest. Some states prohibit it entirely.
What is Dual Agency?
Dual agency exists when one agent (or one brokerage) represents both the buyer and the seller in the same real estate transaction. Because agents have fiduciary duties to their clients, representing both sides creates an inherent conflict of interest.
Types of Dual Agency
| Type | Description |
|---|---|
| Single Agent Dual Agency | Same individual agent represents both parties |
| In-House Dual Agency | Different agents at same brokerage represent each party |
| Designated Agency | Brokerage designates separate agents for each party |
Dual Agency Concerns
| Concern | Explanation |
|---|---|
| Confidentiality | Agent knows both parties' negotiating positions |
| Loyalty | Cannot fully advocate for either party |
| Full Disclosure | Cannot share all relevant information |
| Best Price | Competing interests on price |
State Regulations on Dual Agency
| State Approach | Examples |
|---|---|
| Prohibited | Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, Vermont |
| Allowed with Consent | Most states require written disclosure and consent |
| Limited Duties | Many states reduce agent duties in dual agency |
Required Disclosures
| Disclosure | When Required |
|---|---|
| Written Consent | Before or when dual agency begins |
| Nature of Relationship | Explain limited representation |
| Potential Conflicts | Disclose specific concerns |
| Right to Refuse | Parties can decline dual agency |
Agent Duties in Dual Agency
| Standard Agency | Dual Agency |
|---|---|
| Full Loyalty | Neutral, balanced treatment |
| Confidential Advice | Limited advice to both |
| Negotiate Best Terms | Facilitate (not advocate) |
| Disclose All Material Facts | Still required |
Alternatives to Dual Agency
| Option | Description |
|---|---|
| Separate Agents | Each party has own agent |
| Transaction Broker | Neutral facilitator (not advocate) |
| Designated Agency | Separate agents within same brokerage |
| Attorney Representation | Lawyer represents party's interests |
Pros and Cons of Dual Agency
| Pros | Cons |
|---|---|
| Streamlined communication | Conflict of interest |
| Potentially faster transaction | Limited advocacy |
| May reduce commission (negotiable) | Confidentiality concerns |
| Single point of contact | Legal liability for agent |
Exam Alert
Dual agency = one agent/brokerage represents BOTH buyer and seller. Requires written disclosure and consent in most states. Some states prohibit dual agency entirely. Agent becomes neutral facilitator, not advocate.