Dual Agency



DUAL AGENT! Sounds like something out of a James Bond thriller, doesn’t it? Sadly it is not that exciting, but the meaning is not far off, as in the movies it means an agent working for both the good guys and the bad guys.

Studying for your real estate exam, many times you'll come across something where people say, “You will never use that again after you pass!" This is not one of those things. This will come up in your real estate career quite a bit.

There are times when a buyer and a seller will have the option to enter into a dual real estate agency with their real estate agent. This is not necessarily a bad thing; it all depends on how it is handled by the people involved.

This commonly happens when potential buyers who don’t have an agent contact a seller’s real estate agent either at the open house or from an advertisement. They can ask the seller's agent to submit an offer on their behalf. If the agent does this, the agent would be acting as a dual agent.

Dual agency in a real estate transaction means the broker represents both the seller and the buyer. Dual agencies can occur with one or two agents. To understand this further, you have to remember that the agent is not really the one who is being hired—the broker is. This may seem odd, as clients only have contact with the agent and may never see the broker.

The agent works under a broker. Therefore technically speaking the agent is soliciting business for the broker, not themselves. When the transaction is completed, the broker is the one who is actually paid the commission. The broker will share the commission with the agent who solicited the business and completed the transaction.

Understanding this will help you understand how a dual agency can occur when there are two real estate agents involved, because the buyer’s agent and the seller’s agent may be licensed under the same broker.

Dual agencies have a potential conflict of interest for the buyer and seller, which is why it is not allowed in some states. Where dual agencies are allowed, the real estate agent must inform both the buyer and seller of a dual real estate agency in writing.

Dual agency imposes some restrictions on a real estate agent. Have you ever had to mediate an argument between two friends or even a couple? It can be uncomfortable because the two parties are at odds and you must be looking out for both of them, which means you cannot take one party's side over the other.

The agent is required to treat both the buyer and the seller with fairness and honesty. The agent is required to provide full disclosure regarding the property, but cannot reveal confidential personal information of either party.

Because you are looking out for both parties' interests, when it is time to make an offer the real estate agent cannot advise the buyer or the seller on the price to offer and/or the price to accept. In short, the agent's loyalty is now gone, as you cannot try to advance the interests of one party over the other. You have to stay neutral.