Dual Agency Considerations

Jane Gray
Published on January 24, 2017

Dual Agency Considerations

Most real estate transactions benefit from having representation by a licensed real estate agent and for good reason.  Laws change all the time, contracts allow many variations on a theme, and buyers and sellers, I think it’s fair to say, want to be assisted with good advice on reaching their real estate goals with the least headache while also achieving the best value.

The parties to a transaction typically involve a Buyer, a Seller, a Buyer’s Agent, and a Seller’s Agent.  In California, it’s legal for the same real estate agent or Brokerage to represent both the Buyer and the Seller in the same transaction. This relationship is known as Dual Agency.agent-dual-agency

It may come as a surprise that two different agents from the same Brokerage also represent Dual Agency because technically the relationship between Sellers and Buyers is established with the Broker. Agents work for Brokers. The relationship between a real estate agent and a client whether Buyer or Seller is called a fiduciary relationship.broker-dual-agency

Not all agents will work both sides, but if they do you’ll want to keep in mind these considerations because when representing both sides, one agent will not be able to provide the full scope of their fiduciary responsibility:

#1 An agent acting as a dual agent must explain to both the Buyer and the Seller that the Agent is acting for both parties.  The agent should also explain the effects of dual representation, including that by consenting to the dual agency relationship, the Buyer and Seller are giving up their right to undivided loyalty. This may create a conflict of interest.

#2 A benefit to Dual Agency is that the real estate transaction itself has a greater potential to be more streamlined and efficient.  One of the most common reasons that real estate transactions fall apart in general is due to a lack of communication between agents.  When one agent is working with the Buyer and another with the Seller, there is a greater chance for missed deadlines, missing documents, or delays in closing.  With one agent working for both Buyer and Seller, the agent controls the documents and deadlines.

#3 Disclosure about the property is required from Sellers and their Agents. Not disclosing may get an Agent in trouble and sometimes an Agent fails to share all the information known about the property.  With dual agency, the chances for full disclosure tend to improve.

#4 Before you consider this option, understand that there can also be some serious drawbacks from greedy agents who will say and do anything to represent both sides of the deal.  The increased reward sometimes may drive the wrong behavior! free-money-clipart If you feel that an agent is being dishonest, you should reconsider using Dual Agency ( and maybe even consider interviewing other agents to find one you trust even outside of a Dual Agency relationship!)  A Dual Agent may restrict showings in order to reduce the competition when in fact, the best way for a Seller to secure the most money on their property is have maximum marketing exposure to reach the greatest number of people.

#5 Lack of impartial advice.  Face it, the Dual Agent can’t always understand both sides’ bottom line AND negotiate the best deal for both sides.  It’s possible, but it isn’t always going to work.  Say for instance that two different agents are negotiating for their respective clients.  The opportunity exists to make a counteroffer to increase the likelihood of a good compromise between the parties whereas in a Dual Agency situation, the  Dual Agent may not suggest a counter offer if it’s too low knowing the Seller is motivated to sell for instance and thereby leaves money on the table.

Dual Agency isn’t going to work in every situation.  If you aren’t comfortable with having an Agent represent both sides, you are well within your rights to forbid them from representing the other side.  You’ll need to establish this up front.  Sometimes Agents will remove themselves from a Dual Agent situation where they can’t provide the best representation for both sides.dictionary-word

In a dual agency situation, the agent has the following affirmative obligation to both the buyer and the seller:  A fiduciary duty of utmost care, integrity, honesty, and loyalty in the dealings with buyer and seller.

#6 In many cases, Dual Agency can work out very well.  In a recent transaction of a house that was in Foreclosure proceedings and was in rough shape, the home was listed slightly below market value to generate the most offers.  We received 5 offers over asking and the highest offer was from an unrepresented buyer.  The Seller was pleased with the getting the most money and the most favorable terms as well as having me stop the clock to the house being sold on the courthouse steps.  The Buyer was happy too with securing a home that had enough room in the comparable values to rehab and rent out.

Dual Agency Considerations
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