Key Takeaways
- Dual agency might simplify communication but can create conflicts of interest.
- It's legal in many states but must be disclosed to both parties.
- Some states ban dual agency to ensure fair client representation.
- Consider separate agents for unbiased negotiation and better advocacy.
Article Summary
Dual agency is when the same real estate agent represents the buyer and the seller in the same home purchase transaction.
Dual Agency: Explained in Plain English
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.
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 experience, and helping secure the best deal on a home.
Common Questions About Dual Agency
Frequently asked questions about dual agency and how it affects home buyers.
