In real estate transactions, what does "dual agency" refer to?

Dual agency refers to a situation in real estate transactions where a brokerage firm represents both the buyer and the seller in the same transaction. This means that the firm is acting on behalf of two parties with potentially conflicting interests. In this arrangement, the broker must navigate the nuances of representing both clients simultaneously, maintaining a level of fairness and impartiality while adhering to fiduciary duties.

This concept is significant because dual agency can lead to challenges, such as potential conflicts of interest, which require transparency and clear communication between all parties involved. It's essential that both the buyer and the seller give informed consent to this type of representation, which is often documented in writing to ensure understanding of the limits of representation and the responsibilities of the broker to each client.

Understanding dual agency is crucial for those in the real estate field, as it impacts how transactions are conducted, potential disclosures, and the overall dynamics of the relationship between agents and clients.