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If you decide to sell your home, you’ll work with a listing agent. If you’re on the hunt for a home, you need to find a selling agent. What you may not plan to encounter is a dual agent.Ìý

What is dual agency in real estate? This isn’t a common arrangement, so you may need insight into what dual agency entails.Ìý

You may find that your agent also represents the seller of your dream home, which can make dual agency tempting. For some major insight into how the process works, what the pros and cons are, and if it’s even legal where you live, read on.Ìý

What is a dual agent?Ìý

While a dual agent sounds like a job title straight out of a James Bond movie, the title represents something a bit less exciting.Ìý

A dual agent is simply a real estate agent who represents both the home buyer and the seller in a real estate transaction. It’s much more common to have separate real estate agents represent the buyer and seller, as different representation helps avoid a conflict of interest (we’ll elaborate more on this issue in a bit).Ìý

It’s most common to come across dual agency when a buyer’s real estate agent happens to list a home for someone else that the buyer happens to falls in love with. The odds of the stars aligning here are slim, but it does occur on occasion. When the opportunity does arise, dual agency may seem like a convenient arrangement at first glance — and in some ways it can be — but dual agency also comes with some major ethical concerns.Ìý

Is dual agency ethical?Ìý

If you’ve already started to pick up on the fact that the concept of dual agents can be perceived as unethical, you’re not wrong.Ìý

When a real estate agent sells a home, they split the commission paid by the seller with the buyer’s real estate agent. Dual agents receive double the commission they normally would in a real estate transaction where they represent both the buyer or seller. That means they have double the incentive to close the sale, and may not disclose important information to either the buyer or seller that could jeopardize the sale and their hefty commission.Ìý

They may also struggle with the fact that they need to help two clients negotiate against each other. This is especially a concern if the real estate agent is closer with one client than the other. Even if they don’t intend to, the dual agent may subconsciously provide better representation to one party.Ìý

When a listing agent and selling agent work together to close a real estate transaction, two things happen. To start, they each have their client’s best interests in mind and can champion them. Secondly, they keep each other in check. What do we mean by that? The average consumer naturally isn’t up to snuff on real estate best practices and laws. So, it’s best to have another agent watch out for any fishy behavior by their counterpart. Each agent should ideally make sure everything is above board and that they protect their client throughout the process.Ìý

Related: How much do real estate agents make?

Is dual agency illegal?Ìý

While dual agency can be ethical when the dual agent manages the process correctly, the more important question is, is it legal? The answer to that question depends on where you live. Dual agency is illegal in some states. Even if both the buyer and seller want to work with a dual agent, they can’t do so legally in these states:

• Alaska
• Colorado
• Florida
• Kansas
• Maryland
• Oklahoma
• Texas
• Vermont
  

Chances are, your real estate agent won’t propose dual agency if it’s not legal in your state. If they do, that’s a big red flag and you should reconsider your relationship with them. Even if the state you live in allows dual agency, there are typically restrictions on the process. Both the buyer and seller will have to give written permission to the real estate agent to move forward in the event that the opportunity for dual agency arrives. Without permission from both parties, there’s no way for dual agency to occur.Ìý

Learn more about unethical realtor behavior

Pros and cons of dual agency in real estate

Like most things in life, there are both advantages and disadvantages associated with the dual agency process. Let’s take a closer look at both sides of this coin so you know what you’re up against.Ìý

Pros of dual agency

• Streamlined communication. With just one real estate agent going back and forth between the buyer and seller, communication between parties is streamlined. This can speed up the entire process, which is important if you are a buyer in a competitive real estate market. You don’t have to wait for your agent to connect with the other agent, who then has to connect with the seller and start the whole process over again. Instead, you just have one agent in the middle handling communication, scheduling, paperwork, and deadlines.
• Full disclosure is a must. Because both parties have to give their written consent to work with a dual agent, everyone walks into the experience with their eyes wide open.Ìý
• Access to more properties and sellers. When you consent to dual agency as a buyer, you widen your home search to include your real estate agent’s listings. On the flip side, the seller now has more potential buyers who may choose to purchase their home. The buyer also gains access to all of the listings of the other real estate agents in their agent’s brokerage. If you choose to work with a real estate agent that is part of a major brokerage, this gives you access to many more homes in the area.
• Sellers can save money. In some cases a dual agent’s broker may offer to take a smaller fee in exchange for representing both the buyer and seller, which can save the seller money. If they want to make a competitive deal, they may even pass some of those savings along to the buyer by accepting a lower offer.

Cons of dual agency

• You miss out on advice from your agent. When you work with a dual agent, they should stay impartial and need to avoid potential conflicts of interest. To accomplish this, they aren’t allowed to take sides or give advice. Normally your real estate agent acts as a coach, but a dual agent should only act as a referee. If you’re a first-time buyer or seller, you may appreciate having an industry expert give you advice throughout the process, so this loss may be impactful. A home is a big purchase, so buyers can gain a lot of confidence when they have their agent on their side.Ìý
• No system of checks and balances. When you have two real estate agents involved in a transaction, you have two professionals involved to make sure everything goes smoothly. This isn’t to say a dual agent will necessarily do a bad job, but a second set of eyes never hurts.Ìý
• Dual agency can cause confusion and uncertainty. That lack of advice from the real estate agent and suspicions about their impartiality can lead to confusion and uncertainty, which makes an already stressful situation more stressful.Ìý

Should you work with a dual agent?Ìý

If dual agency is legal in your state and you find a real estate agent you trust to manage to process correctly and fairly, then you may find that a dual agency arrangement is the right fit for you. That being said, you get a better quality of service, more support, and a lot more impartiality when you work with an independent agent. Whenever possible, it’s best to skip a dual agency arrangement.Ìý

If you find your dream home and it’s listed by your real estate agent, you may be tempted to move ahead with dual agency. Make sure you weigh both the pros and cons before you decide to work with a dual agent — and trust your gut here before you make any written agreements.