How Does Dual Agency Work? Here’s What You Need to Know

Dual agency might sound like part of a plotline in a James Bond movie, but it’s actually a real estate practice that involves one real estate agent acting on behalf of both the buyer and the seller in a property transaction. In some cases, dual agency involves two agents working for the same real estate firm. 

For any dual agency transaction to occur, the agent or agency must get consent in writing from the buyer and seller. Let’s dive into how dual agency works and how to determine whether it’s the right option for your real estate transaction.

What Is Dual Agency?

A dual agent is a real estate agent who represents both the buyer and the seller in a real estate transaction. Those in favor of dual agency say that it’s a more efficient way of conducting real estate business because it streamlines communication between the parties, which always saves time. 

Opponents of dual agency insist that there’s too much conflict of interest when representing both the buyer and the seller for the agent to take a neutral stance. That’s why dual agency is illegal in eight states: Alaska, Colorado, Florida, Kansas, Maryland, Texas, Wyoming, and Vermont.

How Does Dual Agency Work?

If the buyer and seller understand the risks of a dual agent situation and want to move forward with the sale, then, in some states, both parties will sign an official disclosure agreement for the state department of real estate. Keep in mind that some states that allow dual agency don’t require such paperwork.

Then, the agent will work on behalf of the buyer and seller to close the real estate transaction as quickly as possible. Ideally, they’ll work fairly to provide both parties with the best deal available. Once the transaction closes, the dual agent will receive the full commission, which is paid by the seller. In the instance that the dual agency involved two agents from the same real estate firm, they will split the commission.

The Pros and Cons of Dual Agency

If you’re considering working with a dual agent, there are several benefits and drawbacks to consider. Weigh the following pros and cons before making your decision.

Pros of Dual Agency

Consider these benefits when deciding whether to work with a dual agent.

• Streamlined process: One benefit of working with a dual agent is that there is a single point of contact for both the buyer and the seller. This method may help reduce communication delays, and it certainly streamlines the process for the real estate agent.

• Potential savings: Since there’s only one agent, the seller will likely have to pay less agent fees and commissions. Ideally, seller savings could make them more agreeable to a lower purchase price, which benefits the buyer. However, all parties must agree to these terms to achieve any savings.

Cons of Dual Agency

Don’t overlook these drawbacks before agreeing to a dual agency transaction.

• Negotiations may not be on your side: Whether you are the buyer or the seller, the dual agent might not be too keen on a long negotiation process. A dual agent will likely want to close the deal quickly, which could leave one or both parties feeling dissatisfied with the final purchase agreement.

• Potential conflict of interest: Dual agency is controversial because of the risk of a conflict of interest. It can be difficult for the dual agent to uphold their client’s interests when working with both sides of the transaction. That’s why many states have outlawed dual agency altogether.

• More work for the agent: The dual agent will need to secure the paperwork necessary for all parties involved in the real estate deal, creating more work for themselves.

When to Consider Working With a Dual Agent

By this point, you may be wondering when is it ever a good idea to work with a dual agent?

Dual agency works well in situations where the real estate transaction is forthright and free of obstacles. For example, dual agency works well when the buyer and seller are relatives, business partners, or even good friends. In this case, a real estate agent would be beneficial in getting both parties—who presumably trust each other—to a closing date faster, especially when there are no major price negotiations or issues to address. 

Dual agency could also be on the table for a house hunter who doesn’t have a real estate agent yet. If they attend an open house where they meet the seller’s agent, they may ask to work with the same agent to complete the sales transaction. Provided the seller is on board with sharing an agent, the dual agency can proceed. 

Another version of this dual agency scenario is if two agents from the same agency represent the buyer and the seller. In this case, there are two separate real estate professionals, but it’s considered a dual agency situation because they represent the same firm or brokerage.