Duel Agency or Dual Agency: Representing Both Sides of a Real Estate Transaction

Thanks to a wonderful typo in a Microsoft Teams group message at PREC, this week’s blog topic is how to successfully represent two clients as a dual agent in a real estate transaction!

Let’s go back to Agency 101, what is a dual agent? This happens when an agent works for both a buyer and a seller in a single transaction.  You may be wondering, “Is this legal?” or, “I thought agents had fiduciary duties.” or, “How does this happen?”

The short answers are “Kind of,” “They Do,” and “I will tell you if you continue reading!” A brief note, dual agency is practiced differently in every state and even if dual agency is allowed by law, your brokerage may have policies against it. Follow up with your broker if you are uncertain about your brokerage’s policies. It is also very important to know your state’s laws regarding dual agency before entering this kind of relationship. You will most likely have to get written consent from both parties before you start acting as a dual agent.

Dual Agency Situations:

• How might a dual agency situation come up in real estate? One scenario occurs when a seller’s agent holds an open house and an unrepresented potential buyer asks that agent to help them make an offer. That seller’s agent is going to say, “YES! Let me help draft that offer and get a second commission for this house!” 

• Another scenario is when an agent who represents buyers and sellers has a buyer client who they know would be interested in a potential seller client’s property. The buyer’s agent is going to tell the potential seller client, “I have these buyer clients who would absolutely love this house. It’s just what they’re looking for!” 

• A third scenario is when a buyer’s agent and seller’s agent work for the same brokerage.  This is sometimes called a designated agency and allows representation of each client while keeping the commission under one brokerage. The managing broker would be considered the dual agent in this scenario. One agent within the firm would be designated to represent the seller and a different agent within the firm the buyer.

What about my Fiduciary Duties?

A dual agency agreement changes the nature of representation. When both parties agree to be represented by the same agent those duties change, and it is the agent’s responsibility to maintain a level of professionalism and confidentiality. You will still have to disclose all facts that materially affect the property value. You will still be required to give all offers to the seller. You will still be required to withhold confidential information like whether the seller is in a rush to sell or whether the buyer can afford a higher price. You can’t use information gained in a dual agency agreement to the detriment of one party.

It is important to remember that with these kinds of relationships, there will be limits on what information can be disclosed and how you have to communicate with both sides. Your duties of confidentiality and disclosure may change depending on what state you’re licensed in.

Is this even legal?

This is such a lawyer answer but, yes and no, depending on the state you are licensed in. Some states like Kentucky allow dual agency. Kentucky specifically requires written disclosure of the agency relationship and written consent by both the buyer and seller. Kentucky also has what are called transactional brokerage relationships and designated agency relationships. 

Some states like Florida say that dual agency is illegal. However, they functionally have similar laws as Kentucky, they just don’t call it dual agency. States like Florida call it a transactional broker relationship. There must be written consent signed by both parties involved and the agent/broker must deal fairly and honestly with both sides. They cannot use the information given by one side to the detriment of the other when working as a transactional broker.

Some brokerages avoid allowing their agents to act as dual agents because it can create a mess. When an agent is representing a buyer and a seller and then a third party makes a better offer than the buyer, who loses out on the property, this can cause problems legally. Check your brokerage’s policies about dual agencies and be conscious of your state’s laws. 

So why is the Dualing (dueling?) Agency Allowed?

There are quite a few benefits to working as a dual agent. The first is streamlined communication. You won’t have to wait for the other agent to return your calls or emails. You get to communicate with both parties directly so you can facilitate the transaction more efficiently. Let’s not forget the double commission! But sometimes you may want to forget that double commission and pass along some savings to the clients leading to more client satisfaction and referral business.   When in a dual agency, ask your broker about reducing fees.

Remember that you have responsibilities to both sides in a real estate transaction, even if you do not represent both sides. You will still be held to the level of a professional and your duties to disclose defects of a property do not get pushed to the side in a dual agency transaction. You’re not some tyrant puppet master tossing both parties in the ring to watch them duel it out. You’re there to help them buy and sell a house and if you can do that honestly, fairly, and not to the detriment of one side, you may be able to work as a dual agent. If you don’t, all the fingers will be pointing at you, even your own client’s.

If you’re curious about your state’s dual agency laws, feel free to reach out to our education content developer, John Tallarigo, or head instructor, Kent Gray. 

Meet John Tallarigo. John is the education content developer and is working on expanding PREC coursework into new states and additional courses for our current states. His interest in property law led him to get his real estate license while studying for the bar exam! John is a graduate of NKU Chase College of Law '16 and earned his undergraduate degree from Northern Kentucky University '11. He loves the Cincinnati Bengals!