A dual agency exists when a broker or agent represents both the buyer and the seller of a property. Dual agency is forbidden in some locales. Many experts feel that neither the buyer nor the seller receives adequate representation in this situation. It appears to be a conflict of interest when brokers or agents represent their clients through dual agency.
Aspects of Single Agency
A broker who represents a buyer is prohibited from showing them properties listed by the broker’s agency under single agency. These are referred to as “in-house listings.” They can’t show them without the buyer’s express permission. It becomes a dual agency if that buyer wants to purchase a property listed by the agency that’s representing, and if the seller agrees. This means that the broker’s agency is representing both the buyer and the seller at the same time.
Fiduciary Duties
The agent owes their client fiduciary duties of loyalty and obedience in most other types of agency relationships. You can expect the agent to place your interests ahead of their own. You can expect them to provide services with honesty and good faith, and to avoid conflicts of interest. Real estate agents have no legal obligation to look after their clients’ best interests in some cases. Laws in 25 states allow brokers to provide services to buyers and sellers as “transaction brokers” or “facilitators.” This allows them to work without the traditional fiduciary duties of loyalty and obedience. In the other 25 states, the agent is required by law to:
Deal honestly and fairlyShow loyaltyRespect confidentialityExhibit obedience to the best interests of their clientGive full disclosure, alwaysAccount for all fundsExhibit skill, care, and diligence in the transaction
They must present all offers and counteroffers in a timely manner unless a party has otherwise directed the agent in writing. They must disclose all known facts that materially affect the value of a residential real property and aren’t readily observable.
Transaction Broker Agency Relationship
A transaction broker is the default role of a broker or agent. They don’t represent the buyer or the seller. They instead act as a neutral go-between to help both parties complete a home sale. The broker is representing the transaction in this case. They act as a neutral party. The transaction broker owes both parties limited confidentiality. This means that the transaction broker can’t tell the buyer that the seller would agree to a lower price, or tell the seller that the buyer would go higher, without the express permission of the party in question.
Is Single Agency the Right Choice?
While dual agency is not allowed in some parts of the country, you may live in a place where you’re able to choose between single agency and dual agency. Is single agency the right choice for you? Both buyers and sellers are often better served by single agency. You’re better off with single agency if you want to be sure your that real estate agent is acting in your best interests. The agent is required to act in the best interests of both the buyer and the seller in dual agency, which can be very difficult to do at the same time.
