What Is Dual Agency?
Dual agency is a situation that develops when the broker in a real estate transaction represents both the seller and the buyer. Also known as a transaction broker, a dual agent works directly for both parties to find the best possible outcome. While this type of relationship is potentially limiting and can be controversial, dual agency can prove beneficial due to increased transparency, faster information flow, and overall efficiency throughout the transaction process.
How dual agency develops
Dual agency occurs when a single broker or brokerage firm represents both sides of a property deal. While some dual agency relationships involve a single agent working as both a listing agent and buyer’s agent, dual agency also exists when there are multiple agents working for the same firm.
While many interactions are possible between property buyers, property sellers, and their respective agents, the following two relationships are the most common:
- A relationship where an individual real estate agent represents both the buyer and the seller in a property transaction. For example, if you hire me as your realtor when searching for a home, you may become interested in a home that I represent as a listing agent. In this case, a single agent is the dual agent.
- A relationship where a single brokerage firm represents both the buyer and the seller in a property transaction. For example, when you hire me in your search for a home, you may become interested in a home listed by another agent working at the same brokerage firm. In this case, a single agency is the dual agent.
Potential issues with dual agency
Due to a perceived conflict of interest, dual agency is looked down upon and is even illegal in some American states. Dual agency can cause legal issues because real estate agents are bound by fiduciary duties. These duties are written into state, contract, tort, and licensing laws, and basically require agents to give undivided loyalty to their clients. This can be difficult in some dual arrangements, especially when it comes to price negotiation.
Dual agency arrangements can also lead to flawed transactions and contractual inefficiencies, with a fresh set of eyes not available to check contract details. When there are two separate agents involved with a property transaction, human and automated errors are more likely to get noticed by the other party.
Benefits of a dual agency arrangement
When this type of relationship is legal, the real estate agents in question need to abide by a strict code of ethics and ensure that certain restrictions are met. Among other things, the agent is required to fully disclose all relevant information about the property to the buyer, and conceal all relevant confidential information about the seller to the buyer.
While confidential personal information is always protected, sometimes, the free flow of information can be a distinct advantage to both sellers and buyers. For example, because the buyer’s agent and listing agent are the same entity, any questions you have about the property are more likely to get answered accurately and in a timely fashion.
This efficient flow of information can make all the difference in a property transaction, with buyers more likely to make the right decisions and sellers benefiting from a more transparent process.
When dual agency is handled effectively, the entire process can be faster and more efficient. Besides, you might even save yourself some commission along the way by splitting costs within a single agency.
While dual agency is not ideal for every person or property deal, with the appropriate checks and balances, it can provide significant advantages and lead to a more streamlined transaction process.