Dual Agency: What Buyers Should Know (2024)

FAQs

Dual Agency: What Buyers Should Know? ›

In a dual agency situation, the same real estate agent represents both the buyer and the seller of a home. This arrangement can be risky for buyers, since agents are paid based on how much the home sells for.

A dual agent is an individual who acts as both the buyer's and seller's agent in a transaction. It is easy to confuse dual agents with designated agents. But unlike a dual agent, designated agents are two separate individuals representing the buyer or the seller.

The seller typically pays both agents' commissions, so the seller is the one who can directly save money in this situation. But when the seller's costs are lower, they may be willing to accept a lower price from the buyer. The seller, buyer and agent could all benefit from the arrangement.

Dual Agency in Real Estate: Pros and Cons

It occurs when a single real estate agent represents the buyer and the seller in a transaction. This arrangement can lead to conflicts of interest and potentially compromise either party's interests.

In rare situations, it can make sense for a real estate agent to represent both the buyer and seller in the same sale (which we'll discuss shortly). But it's almost always best to avoid a dual representation scenario.

Know the Common Dual Agency Lawsuit Risks

Acting in the negotiating role when that is strictly prohibited in a dual agency transaction. Disclosing confidential information to one party or the other. Giving one party an advantage over the other.

At the time that the listing agreement is signed.

The biggest issue with dual agency is that having the same person represent both sides can be seen as an ethical dilemma. “If a listing agent has already established a relationship with the seller, they may want to settle with a higher price,” says Minkiewicz.

Agents owe fiduciary duties to their clients, including loyalty, confidentiality, full disclosure, and acting in the client's best interests. In dual agency, these duties can become compromised, as the agent must balance the interests of both parties.

So will going directly to the listing agent save you money? In reality, yes you may have the illusion of saving money upfront on the purchase price but remember you get what you pay for. Most often what happens is you don't save money and you are completely unrepresented by an agent.

Why is dual agency illegal in some states? ›

Competing Interests

This means that the agent will prioritize buyers who can pay higher prices. So, when one agent acts for both the seller and the buyer, a conflict of interest occurs. With the clash of interests, a dual agency may end up favoring one party in some way.

Specific to dual agency, the failure to disclose and obtain the consent of the principal to the dual agency may result in disgorgement of the broker's compensation and rescission of the transaction.

A dual agency is when the same agent represents a seller and a buyer. Therefore, a dual agent must have consent to share information with either party to ensure neutrality. Dual agents are called transaction brokers because they must represent sellers and buyers to ensure a transaction but do not have a fiduciary duty.

A dual agent has more incentive to close a deal as quickly as possible. The dual agent may not tell you if the listing price is too much. Dual agency takes away some of your legal options in the event that issues arise. The seller may have a long-standing relationship with the agent.

“For an agent to represent both sides in a real estate transaction, they must receive informed consent from the buyer and the seller,” he says. “If either the buyer or seller isn't comfortable with the idea, they reserve the right to opt out of the deal.”

Before a dual agency can move forward, both the buyer and the seller must consent to the agent representing both parties. Even after consent has been given by both parties, the agent is legally required to remain neutral and keep all information about each party confidential.

What BEST describes a dual contract? It is two contracts on the same property, for different prices, made by the same buyer. Two salespeople working for the same broker obtained offers on a property listed with their firm.

Exclusivity refers to whether you'll be able to work with other buyer's agents. With an exclusive buyer agency agreement, you pledge to work with only one buyer's agent – the one offering you the buyer agency agreement. If you don't want to work with one agent exclusively, you can ask for a nonexclusive arrangement.

Disclosed limited agency is just another name for dual agency. That is, a situation in which a single agent represents both the buyer and the seller in a real estate transaction.