What does 'dual agency' refer to in real estate?

Dual agency refers to the situation in real estate where a single agent represents both the buyer and the seller in a transaction. This arrangement can create a unique set of circumstances because the agent must navigate the interests of both parties, which may have opposing goals. For example, the seller typically wants to achieve the highest price for their property, while the buyer usually aims to pay the least amount possible.

In a dual agency scenario, the agent is required to maintain impartiality and confidentiality, which can be quite challenging. They need to disclose any material facts that could affect either party’s decision-making without compromising the other party’s interests. Because of these complexities, many states have specific regulations governing dual agency to ensure transparency and protect the rights of both parties.

Other choices, while related to agency in real estate, do not accurately represent what dual agency entails. For instance, the concept of multiple agents representing a single client, an agent acting solely on behalf of a buyer, or representing multiple clients in a similar geographical area does not accurately depict the unique dual agency relationship.