Dual agency

Dual agency is a situation where the same agent or brokerage represents both sides of a real estate transaction. It typically arises when a listing agent ends up representing a buyer who came through their open house, called them directly off the listing, or otherwise approached them rather than working with a separate buyer's agent.

How it works: state laws vary on what dual agency is allowed and what disclosures it requires. Some states prohibit it entirely, requiring the agent to refer one side to a different broker. Others allow it with explicit written consent from both parties. A few states convert dual-agency situations to "transaction broker" or "facilitator" status, in which the agent is neutral rather than fiduciary to either side.

Why it matters: a fiduciary duty means the agent is obligated to act in their client's best interest, including negotiating hard on price and terms. The same agent representing both sides can't fully discharge that duty for both, the seller wants the highest price; the buyer wants the lowest. The structural conflict is real, and it's why some states prohibit the arrangement.

Common gotcha: dual agency sometimes happens informally, where a buyer reaches out directly to the listing agent without realizing the implications. Both parties should understand what the agent's actual duties become in this scenario before agreeing. In most states, the disclosure has to be written and signed, but the practical change in representation is real even when the paperwork is clean.