Don’t Fear the Dual Agency

Dual agencies leave a lot of gray areas when it comes to loyalty, so many buyers are wary of agreeing to one. They are even illegal in several states, including Colorado, Alaska, and Texas. While a dual agency has the potential to work out against you (it’s hard for an agent who’s representing the seller to look out for your best interests as a buyer as well), it’s not necessarily a bad thing.

A dual agency can expedite the negotiation and transaction process. An agent who’s also representing the seller will have more insight about the property and what areas leave the most room for negotiation. And because the dual agent doesn’t have to split the commission with another broker, many agents working on dual agencies will accept lower commissions, so the seller will accept a lower bid.

But don’t assume a dual agency will guarantee you get the best price—agents have a strict legal obligation to maintain their fiduciary duties on both sides of the transaction, so they’ll have to make sure they’re getting the best offer that makes both the buyer and seller happy. For that reason, in a dual agency, neither side gets the full benefit of having an agent fully devoted to their interests. It’s impossible to simultaneously perform the duty of trying to buy for the lowest price possible while trying to sell for the highest price possible. Rather, the dual agent’s job will be to try and bring the parties together at a mutually agreeable number.

Nor is a dual agency a way to obtain secret information about the other party—the agent is required to preserve the confidential information of both sides unless that information is material to the value or desirability of the property. But where the information is material to value or desirability, it must be disclosed to both parties. This can strengthen or weaken negotiating positions by revealing any out-of-the-ordinary aspects of the transaction that are important to the buyer or seller.

As part of an agent’s fiduciary duties, they have to disclose any potential conflicts of interest—this includes dual agencies. It’s illegal for them to perform a dual agency without your consent, and if you’re uncomfortable with the arrangement, you can find other representation at any time.