Comprehending Dual Agency in Property Deals

Dual agency refers to the situation in which one real estate agent represents both the seller and the buyer in the purchase of a home. It can also happen when separate agents represent the buyer and seller in a purchase transaction in the same real estate agency. Dual agency is not unusual, but occasionally, it can lead to conflicts of interest and give buyers and sellers the impression that their requirements aren’t being well addressed.

A study by the Consumer Federation of America, a Washington, D.C.-based research, advocacy, and education organization, found that over half of homebuyers and sellers are unaware that there are several kinds of agencies. Furthermore, many customers are unaware that a real estate agent has an obligation to act in their best interests.

What Does Real Estate Dual Agency Mean?

Dual agency occurs in a real estate transaction when one real estate agent represents both the seller and the buyer. It can also happen when a real estate corporation represents both sides in a purchase-and-sell or rental transaction or when an agent represents both the landlord and the tenant.

When an agent works for just one party, it’s known as a single agency. The opposite party is represented by a different agent who is employed by a different business. An agent can operate conflict-free in the best interest of their client when they work for a single agency.

What Is the Process of Dual Agency?

In a perfect world, dual agency functions as follows. When someone engages a real estate agent, they are well aware of the trade-offs involved and have the option to determine whether or not they want to deal with two agents. If a customer indicates they are okay with dual agency, the agent requests that they sign an official disclosure with the state department of real estate.
Regretfully, not every state mandates these kinds of disclosures at the outset of an agent-client relationship. Even when they do, these forms aren’t usually legible, easily understood, or written in clear English.

It’s Illegal to Have Two Agencies Certain states do not require clients to consent to dual agency. In actuality, eight states forbid dual agency or severely restrict it:
Colorado, Florida, Kansas, Oklahoma, Texas, Vermont, Wyoming, and Alaska
In certain of these states, agents are not permitted to unintentionally allow dual agency to occur. This may occur when a buyer discovers a house on the internet that they would like to buy, but the house is being offered for sale by the buyer’s agent.

A Dual Agency Agreement: What Is It?

The buyer, seller, and real estate agent engage in a dual agency agreement whereby the agent agrees to act as both the buyer’s and seller’s agent during the property sale in compliance with state law.

It also specifies the conduct expected of the agent while representing both parties, including the prohibition against the agent disclosing sensitive or private information about one party to the other without authorization.

Who pays the commission in a dual agency?

When the same real estate agent represents the seller and buyer, the seller usually pays the entire commission as per standard procedure. A commission of between 5% and 6% of the buying price is customary. In the absence of a dual agency, the selling agent and the buyer’s agent would normally divide the commission equally.