Understanding Dual Agency

Dual agency occurs when both the seller and the buyer have the same real estate brokerage representing them as a fiduciary. In real estate, fiduciary duty to a client requires that the agent maintain duty of care, duty of loyalty and duty of obedience to their client. A dual agency situation is created if the buyer works with the listing agent or another agent within the same company.

Most would agree that it is impossible for an agent to obtain the highest price possible for the seller while getting the best deal for the buyer. This is why dual agency is illegal in several states. In Hawaiʻi, dual agency is permitted as long as disclosure is made to all parties. Some experienced Buyers will go directly to the listing agent for representation because they feel they could potentially get a better deal because the seller may be saving on the commission. For the most part, dual agency should be avoided whenever possible.

If you are looking to buy, seeking out an agent that specializes in buyer representation is a good idea. However, buyers do not have to hire another agent if they prefer to work with the listing agent or another agent within the same company. The agent can work with the buyer as a “customer” instead of a client. In this way, the agent does not have a fiduciary duty to the buyer but still must treat them honestly and fairly. The agent can assist the buyer with all of the details to get them to closing, but they cannot negotiate on their behalf.

Dual agency can be confusing and create a conflict of interest. Ask your agent to clarify agency prior to signing any documents and talk to an attorney if you have concerns.