real estate agent with a for-sale house

A cartoon business agent pointing to a house model with for sale word

Dual agency, or representing both parties in a real estate transaction, places legal limits on a real estate agent’s ability to represent the interests of their client. Sellers and buyers should protect themselves by understanding the effects of dual agency.

Is Dual Agency Legal?

Unlike a real estate closing attorney who can only legally represent one party in a transaction, dual agency in real estate sales is legal. As long as the agent fully discloses the relationship to both buyer and seller and receives their written consent, there is no restriction in representing both.

Common Impacts of Dual Agency

Before the parties in a real estate transaction agree to dual agency they should fully understand the impacts. Dual agency may seem self-explanatory, but having a real estate agent represent both buyer and seller agency has a number of legal ramifications that may not be beneficial to either party. Three common impacts buyers and sellers face in dealing with dual agents include:

Communication Frustration

Dual agents are restricted in releasing confidential information about either client, and they cannot give preferential treatment to either party to the transaction. Client’s of dual agents sometimes become frustrated that the agent will not communicate with them beyond relaying information to and from the other client.

Limited Pricing Advice

Real estate agents often have a better idea of a property’s true market value than the seller or buyer. In most cases, they also know the lowest price a seller is willing to accept or the highest the buyer is willing to offer. However, a dual agent is restricted in using this knowledge to complete the transaction.

Discussions with either client about the price to offer or accept can lead to violations of the dual agency agreement and possibly result in the revocation of the agent’s license. For this reason, their knowledge of the market and experience in selling property is of limited value to either party.

Divided Loyalties

Rather than becoming motivated to negotiate the best deal for their client, the dual agent is relegated to acting as an intermediary between the parties. They must remain impartial and not unduly influence the transaction in favor of either party.

Sellers and Buyers Must Protect Themselves

Dual agency is sometimes unavoidable. When it is necessary, understanding its impacts and assistance from a real estate professional can help buyers and sellers protect their interests.