When a real estate agent represents both the buyer and seller in a real estate transaction, the agent is considered a dual agent.  Since the broker is representing both sides, the broker is unable to maintain all his duties to both parties.  Because of the broker’s potential conflict of interest, the broker must obtain both parties consent to the dual agency.

What Does the Consent Involve?

When a broker represents both sides of a transaction, the broker must ask for both parties? consent in writing.  When the parties consent to dual agency, they are accepting limitations to a traditional real estate broker / client relationship.  These limitations include that the agent will deal impartially with both parties. 

What Are the Advantages and Disadvantages of Dual Agency?

Buyers and sellers may consent to a dual agency for a few reasons. First, the clients may be comfortable with an agent and do not want to switch agents, even if the current agent is representing the other party as well. Second, if a broker for one party ceases representing the transaction, having the remaining agent act as a dual agent can provide some continuity so that the transaction can be concluded without further delays. Finally, some clients might be able to negotiate lower commissions for the dual agent, as both parties will be paying the agent. The cost of the agent can be spread between the two parties.

The downsides of dual agency are potential for conflict of interest and a reduced efficiency in executing the fiduciary duty that real estate brokers have with their clients. Real estate brokers are expected to use their experience and expertise to represent their clients to the best of the agent’s ability. A broker representing both buyer and seller, however, must always be careful not to harm one party while advancing the interests of the other. As a result, certain information and decision-making that would be found in a single agent/client relationship is forbidden in the dual agency.

How Does a Dual Agent Avoid Improper Disclosure?

When the parties consent to dual agency, the broker will have a duty to disclose information to both parties.  The broker must be honest with both parties as long as the broker does not give away information which may weaken or hurt the other party’s bargaining position.  For example, a broker must disclose known defects about the property. 

However, there are exceptions to the disclosure policy: 

  • The agent will not disclose that the:
    • Buyer is willing to pay a higher price
    • Seller is willing to sell for a lower price
    • Buyer or seller is willing to accept different terms
  • The agent will not disclose without prior authorization:
    • The motivation of the buyer or seller
    • Personal information about the buyer or seller

Do I Need a Lawyer if I Work with a Dual Agency Broker?

Because of the risks associated with dual agency, you are strongly encouraged to meet with an experienced real estate attorney. A real estate lawyer can determine if dual agency is appropriate for you, and can review documents and contracts before you sign them.  If you believe an agent acted improperly in dual agency, a real estate attorney can explain your rights and remedies.