What is meant by the term 'dual agency' in real estate?

The term 'dual agency' in real estate refers to a situation in which one agent or broker represents both the buyer and the seller in the same transaction. This arrangement can complicate the agent's responsibilities, as they must navigate the interests of both parties while maintaining a neutral stance.

In dual agency, the agent has to be diligent in ensuring that both the buyer and the seller receive fair treatment, and there is a significant emphasis on disclosure. The agent must be transparent about any potential conflicts of interest that arise from representing both sides. Properly managing these responsibilities is crucial, as failing to do so can lead to legal issues and dissatisfaction among clients.

Understanding this concept is vital for anyone involved in real estate transactions, as dual agency can create unique challenges and requires that agents possess a strong understanding of ethical practices and state regulations related to agency relationships.