What is Dual Agency?

What is Dual Agency in Real Estate and How Does it Work?

Dual Agency occurs when both the buyer and the seller of a property work with either the same agent or the same brokerage in a real estate transaction. Buyers and sellers typically look to have their own representation, so dual agency is considered "outside the norm" in some cases.

Dual agency can sometimes be considered so detrimental to the interests of consumers that in some states it's prohibited by law and illegal. In Minnesota tough, dual agency is allowed, but cannot be forced and all parties but agree in writing ahead of time.

Who Are "Dual Agents"?

A Dual Agent is a real estate agent, REALTOR®, or real estate professional that represents both "sides" (both buyer and seller) in a real estate transaction.

Another form of "dual agent" can also commonly be referred to as a "designated agent". A Designated Agency occurs when each party (buyer and seller) are represented by different real estate agents, BUT the real estate agents work under the same brokerage. Since most real estate contracts are between the brokerage the the consumer, the brokerage would then be overseeing both sides of the transaction.

Dual agency is illegal in the following states: Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, Vermont and Wyoming.

The Pros and Cons of Dual Agency in Real Estate

You may be wondering how can a single real estate agent (or brokerage) simultaneously want to help the buyer get the lowest price and the seller get the highest price on the same transaction? Dual agency can sometimes seem like an overall bad idea, but there can also be positives in some instances.

Dual Agency Pros

• Less time spend in negotiations: Negotiations may be a little more "straight to the point".
• More information on the property: A dual agent may have access to more information on the property which could then allow the buyer to make a better informed decision.
• Smooth transaction process: Having one agent handling both sides of the transaction means that documents can be prepared and signed a little more rapidly.
• Dual agents may agree to a lower commission: Not always a guarantee, but some dual agents may offer a discount in their commission when practicing as a dual agent. Although some agents offer a discount, the dual agent is still doing the work of two agents at once.
• The buyer and seller may know eachother: In a situation where a buyer is already lined up (usually a friend or a family member), some sellers decide to sell their home For Sale By Owner (FSBO) and exclude a real estate agent entirely. But since selling a home can be difficult, some sellers may still want to enlist in the expertise of a real estate professional. In that case, it may make sense to have just one agent instead of two.

Dual Agency Cons

• There can be a conflict of interest: The goal of a listing agent is to get the highest and best offer for the seller and the goal of a selling agent (buyer's agent) is to get the best and the lowest price for the buyer. This can make it difficult when representing both sides of the transaction.
• Complications with negotiations: A dual agent is limited to their ability to full negotiate either side. The dual agent cannot advocate for one party over the other.
• Difficulty looking out for the best interests of both parties: It's almost impossible to represent the best interests of two oppostire sides of the transaction at once. This means that a dual agent cannot fully act on their Fiduciary Duties when they represent two parties of the same transaction. Essentially all that a dual agent is able to do is facilitate the transaction.
• Increased workload for the agent: The dual agent is doing the work of two agents in a single transaction and must split their time between tbe buyer and the seller. It could be difficult to have the full attention of the agent.

Bottom Line

Dual Agency can have its time and place, but regardless it must be disclosed if practiced in that state.