What is a Dual Agent in Real Estate?

Massachusetts, New Hampshire, and Rhode Island Allow Dual Agency

Dual Agency is when a real estate agent represents both the seller and the homebuyer in the same real estate transaction. In such a case, that real estate professional is known as a dual agent. 

Unlike the legal field where one lawyer or law firm is prohibited from representing opposing parties in a transaction, many states, including Massachusetts, New Hampshire & Rhode Island, do still allow this practice when it comes to real estate agents and their real estate companies. The conflicts of interest are obvious when a real estate agent has one client negotiating against another client. In such a case, the agent’s ability to provide true fiduciary duty to both parties is limited. A real estate agent cannot simultaneously negotiate the best price for the seller and the lowest price for the buyer. 

According to the Massachusetts Board of Registration, “a dual agent cannot satisfy fully the duties of loyalty, full disclosure, and obedience to lawful instructions which are required of an exclusive seller or buyer agent.” In Massachusetts, New Hampshire, and Rhode Island real estate professionals must disclose dual agency and home-buying consumers must consent to it. 

Numerous consumer advocates agree that dual agency is not in the best interests of the consumer. The Office of the General Counsel for the New York State Department has cautioned consumers that, “By consenting to dual agency, you are giving up your right to have your agent be loyal to you since your agent is now also representing your adversary. Once you give up that duty of loyalty, the agent can advance interests adverse to yours. For example, once you agree to dual agency, you may need to be careful about what you say to your agent because, although your agent still cannot breach any confidences, your agent may not use the information you give him or her in a way that advances your interests. As a principal in a real estate transaction, you should always know that you have the right to be represented by an agent who is loyal only to you throughout the entire transaction. Your agent's fiduciary duties to you need never be compromised.”

Realtor associations have lobbied for and won numerous changes to state agency laws and real estate regulations, primarily aimed at reducing a real estate agent's legal exposure while preserving their ability to earn commission on both the buyer and seller sides of the same real estate transaction. Such laws are great for the real estate industry, but not so much for consumers. As a result, consumers are often confused and/or misled regarding their real estate agent's loyalties. Homebuyers need to understand the different types of real estate buyer agents in order to know whether they are getting 100 percent loyalty 100 percent of the time.