Most of the time, in a real estate deal both a buyer and a seller are represented by their own agent. But in some home sales, the buyer and seller are both represented by the same agent. This practice is called a dual agency.
While the benefits of a dual agency can seem appealing, this situation also comes with its own complications.
Real estate agents are licensed professionals who have a unique set of fiduciary duties. Fiduciary means ‘faithful servant’ and when it comes to an agent’s role, it means that they promise to act in their client’s best interest. Agents who do not uphold their fiduciary responsibility are at a risk of losing their license.
When a single agent is representing both the buyer and seller in a transaction in a dual agency arrangement, upholding fiduciary responsibilities for both parties can be challenging.
In many states, if a dual agency arrangement occurs, the agent will ask that both the buyer and seller sign an official disclosure as a part of state regulations. But not all states require this disclosure to be signed.
There are also some states including Alaska, Colorado, Florida, Kansas, Oklahoma, Texas, Vermont, and Wyoming, which do not allow dual agency transactions. In these states, an accidental dual agency isn’t even allowed to take place.
Most real estate professionals advocate against dual agency transactions, however, there are some circumstances where they are common, such as:
- New construction. It’s common for unrepresented buyers to explore new build options and visit display suits where they meet selling agents.
- Open houses. In these circumstances, unrepresented buyers may walk into a property during an open house and fall in love.
- Online listings where unrepresented buyers are browsing and reach out to the selling agent on their own.
Dual agency arrangements can mean faster communication and a possible monetary savings for the buyer and seller if the agent is willing to accept a lower commission percentage for the entirety of the deal. However, it is important that agents keep in mind that there are cons to the arrangement including a conflict of interest and tricky negotiations.
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