Conflict of Interest
Real Estate Dual Agency Explained
Dual agency occurs when one agent — or one brokerage — represents both the buyer and the seller in the same transaction. It's controversial, heavily regulated, and frequently tested.
What Is Dual Agency?
Dual agency occurs when the same agent, or the same brokerage, represents both the buyer and seller in a real estate transaction. It creates an inherent conflict of interest because the agent owes fiduciary duties to both parties — whose interests are often opposed.
Dual agency must be disclosed and consented to in writing by both parties before proceeding. Without written consent, undisclosed dual agency is illegal in every state.
Dual Agency: Legal Status by Type
Disclosed Dual Agency
Both parties are informed in writing and give written consent. The agent cannot advocate aggressively for either party — no sharing of confidential motivation or negotiating strategy.
Undisclosed Dual Agency
The agent represents both parties without informing them. Illegal in all states. May result in license revocation, loss of commission, and civil liability.
Designated Agency
The broker assigns one agent to represent the buyer and a different agent to represent the seller within the same firm. Each agent maintains full fiduciary duties to their client.
States That Prohibit Dual Agency
Alaska, Colorado, Florida, Kansas, Maryland, Texas, Vermont, and Wyoming either prohibit disclosed dual agency or limit it significantly.
Dual Agency FAQ for the Exam
What fiduciary duties are reduced in dual agency?
The agent cannot fully exercise loyalty (cannot advocate zealously for either party) or full disclosure (cannot share one party's confidential motivation with the other). Remaining duties — accounting, reasonable care, obedience, and honesty — continue.
What is a dual agency disclosure?
A written disclosure informing both buyer and seller that the same agent or brokerage will represent both parties, explaining the limitations, and obtaining written consent before proceeding.
Is designated agency the same as dual agency?
No. In designated agency, separate agents represent each party with full fiduciary duties to their respective clients. The brokerage itself may be in a dual agency position, but the individual agents are not.