Buyers, Sellers and “Dual Agency”

The Multiple Roles of Agents and Brokers

Buyers and sellers of real estate frequently don’t understand the role of real estate agents and brokers, their functions, and what interests they represent.

All real estate agents are licensed under a real estate broker, and a broker may employ many agents. It is therefore possible for a buyer to work with one agent who is licensed by the same broker as the listing (selling) agent. Legally speaking, real estate agents are categorized as “salespersons”, and who act under the “supervision” of a real estate broker.

When an undecided buyer, looking for a home, contacts an agent, they create a single agency relationship. The agent’s relationship with the buyer changes if the buyer chooses a home listed by that agent’s broker. This situation creates a dual agency. The agents could work at separate offices and be strangers to each other, but since they are licensed by the same broker, they are still operating under dual agency if one agent represents the buyer and the other represents the seller. Not all single agents note the distinction. As a practicality, most of these dual agents act the role of dual agency but continue to function as single-agency representatives.

In California, representing both buyer and seller (dual agency) is permitted with consent of all parties. Any confidential information pertaining to one party cannot be transmitted to the other party, and vice versa. This arrangement can be to the advantage of all involved, since all parties may work to achieve common goals, rather than one party trying to take advantage of the other party.

Real estate brokers and agents actually have no legal obligation

What buyers and sellers alike may not realize is that, in many cases, real estate brokers and agents actually have no legal obligation to look after their best interests. In a dual agency situation, both brokers and agents may guide the transaction to their own best advantage. All states provide avenues for brokers to “double end” a deal, working with both the buyer and seller in the same transaction. They then avoid the need to split commission income with a cooperating broker. In such instances, it is possible that neither the buyer nor seller is fully represented.

Many states now allow brokers to provide services to buyers and sellers as “transaction brokers” or “facilitators,” without traditional fiduciary duties of loyalty and obedience.

DiJulio Law Group
https://www.dijuliolawgroup.com