Dual Agency in Real Estate Explained

What is it?

Dual agency occurs when a single real estate agent or brokerage represents both the buyer and the seller in the same transaction. In this scenario, the agent cannot advocate for the specific interests of either party. Instead, they must act as a neutral facilitator, or 'transaction broker,' managing paperwork and communication. This creates a potential conflict of interest, as the agent's duty to secure the highest price for the seller directly opposes their duty to secure the lowest price for the buyer. Consequently, dual agency is illegal in several states and requires informed, written consent where permitted.

Why is it trending?

This practice often arises in competitive markets where a single, well-known agent lists a desirable property and also attracts a buyer. Some parties find it appealing because it can streamline communication and potentially simplify the closing process by having one point of contact. For real estate agents, the financial incentive is a primary driver, as they can potentially earn the entire commission from both sides of the deal rather than splitting it. This efficiency and financial gain keep the practice relevant despite its controversial nature.

How does it affect people?

For buyers and sellers, dual agency means sacrificing undivided loyalty. Neither party receives strategic advice on pricing, offers, or negotiation tactics. The agent cannot disclose confidential information, such as a buyer's willingness to pay more or a seller's urgency to move. This lack of dedicated advocacy can result in a less favorable outcome for one or both parties. While it may appear simpler on the surface, participants lose a crucial expert negotiator in what is often their largest financial transaction, highlighting the importance of understanding the trade-offs involved.

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