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How problematic is dual agency?

On Behalf of | Mar 28, 2023 | Real Estate Law & Litigation

California, like most states, permits dual agency relationships in real estate transactions providing its strict disclosure and consent laws are adhered to. This means that both the buyer and seller of a property are represented by the same agent. They’ve been duly informed and have consented in writing.

Generally, real estate transactions are single-agency relationships where buyer and seller have separate agents advocating for their interests. But, with happenstance, dual agency situations come up from time to time, and when they do, they present both opportunities and concerns.

On the upside, this option allows buyers to move freely in the market, pursuing properties that interest them the most and working with their agent of choice. Often, these transactions are for primary residences—major financial investments with great emotional impact. To forego that home or work with an agent they don’t know, like or trust as well as simply because the agent has a relationship with the seller is a serious encumbrance.

What’s more, one agent handling both sides of the transaction can streamline processes and speed things along, no small win considering real estate transactions are noted for their protracted timelines.

On the downside, though, there’s potential for conflict of interest, the concern that one agent can’t fully uphold their obligations on both sides. Inevitably, one side or the other will be favored.

It might be noted here that in the adversarial situation of divorce, couples sometimes work with a mediator to reach a settlement. The mediator is one person consulting with both parties first in unison and then individually, confidentially, finally guiding them to a meeting ground. That’s an example of dual agency in another context that works quite well.

Designated Agency

Designated agency is an alternative to dual agency where the agents for buyer and seller come from the same brokerage but are assigned exclusively to their respective parties to the transaction. In this way, concerns about a lack of confidentiality or impartiality are guarded against.

Dual Agency is a proceed-with-caution situation. It can work, but questions may arise. It may be helpful to consult with counsel experienced in this area of the law to understand your rights and achieve the best outcome possible.