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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo

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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. In most real estate transactions, the buyer and seller are each represented by their own separate agents — one buyer’s agent and one seller’s agent. Each agent protects their individual client’s interests. It’s also possible, however, for both the buyer and seller to work with the same real estate agent. This arrangement is called dual agency. Having only one agent or broker involved in a transaction can simplify the process. But it also presents the risk that the agent may favor one party over the other. In fact, in several states, dual agency is actually illegal. Still, that doesn’t mean it’s never worth considering. Here’s what you should know about working with a dual agent, whether you’re a buyer or seller.

How does dual agency work

When homebuyers search for and , they typically do so with the help of a buyer’s agent. The seller of that home, meanwhile, relies on a or seller’s agent, who may or may not be affiliated with another brokerage. Each agent works on behalf of their respective party under a principle known as “fiduciary duty.” In a dual agency situation, the buyer and seller work with a single agent representing them both, instead of separate agents. Dual agency commonly occurs when the buyer and seller use the same brokerage. It can also happen when a buyer calls the listing agent directly, such as through a for-sale sign or online listing, without being represented by their own buyer’s agent. “In my area, our rule of thumb is that whoever shows you the property is the one who will represent you in the transaction,” says Deb Tomaro of the Bloomington, Indiana, brokerage Deb Tomaro Real Estate. “If that same agent or brokerage also represents the seller, this is dual agency.” Whether you’re the buyer or the seller, it’s important to understand how you’re being represented in the transaction. Both parties must agree to a dual agency arrangement, notes Than Merrill, founder of FortuneBuilders, a real estate educational firm. “For an agent to represent both sides in a real estate transaction, they must receive informed consent from the buyer and the seller,” Merrill says. “If either the buyer or seller isn’t comfortable with the idea of using a dual agent, they reserve the right to opt out of the deal.”

Risks of dual agency

By its nature, dual agency can present very real conflicts of interest. As is the case for all agents, a dual agent’s commission is based on how much the home sells for. So they “are incentivized to bid up the sales price,” Merrill says. “That’s not to say that all dual agents don’t have their customers’ best interests in mind, but rather that the incentives inherently work in favor of sellers.” It also raises potential ethical questions. “Dual agency in and of itself is not unethical, but there are actions and tactics that could be sneaky,” says Farid Yaghoubtil, an attorney with Downtown LA Law Group in Los Angeles. He notes that “both the buyer and seller may be under the impression that the agent is biased toward or favoring the other party, which can result in suspicion, mistrust and anger.” Overall though, buyers and sellers can usually count on getting fair, but not full, representation in a dual agency transaction, says Tomaro. “For example, if I am the agent in a dual agency arrangement, I cannot make suggestions to a buyer about because that’s not fairly representing the seller,” she says. “If a buyer tells me he wants to see a list of all homes with 2,000 square feet that sold in the past year in the same neighborhood, I can run that report. But I can’t help him interpret it or point out differences. I can only provide the facts.”

Is dual agency illegal

For these and other reasons, some U.S. states actually prohibit the practice of dual agency. “The fact that it is illegal in several states should be enough to give some parties pause and elicit further consideration,” says Yaghoubtil. Real estate dual agency is illegal in these eight states: Alaska Colorado Florida Kansas Maryland Texas Vermont Wyoming

Advantages of dual agency

While dual agency can be inherently problematic, it can also offer advantages — namely, a smoother transaction. “Since both the seller and buyer are working with the same agent, documents can be prepared and signed more quickly,” notes Raj Dosanjh, founder of Rentround, a U.K.-based rental agent-matching platform. “There will be one person who knows everything about the property. This can eliminate excessive back-and-forth questions the buyer or seller may have.” Another plus? The seller may have more leverage to request a reduced commission fee, since there’s no buyer’s agent. “You can use the single point of payment to your advantage,” Merrill suggests. “You may be able to negotiate lower commission fees when the dual agent doesn’t have to split profits with anyone else.” (Read more on this below.)

How a dual agent s commission is paid

If you use a dual agent, they receive the entire , most often paid by the seller. In contrast, in a traditional two-agent transaction, the commission is split between the two, sometimes to varying degrees depending on the brokerage. A dual agent typically commands the same commission rate — approximately 5 to 6 percent of the home’s selling price — as is charged in a two-agent arrangement, according to Yaghoubtil. But because there’s no second agent to split it with, it can sometimes be open to negotiation.

Bottom line

Dual agency may make for a more convenient transaction, provided you understand the risks and how it works. But it isn’t often recommended. “I believe buyers should have their own representation and enlist their own agent before they start looking for homes,” Tomaro says. “Having representation with a Realtor you trust and develop a relationship with will always end better than just calling a random name on a sign and having them represent you.”

Learn more

SHARE: Erik J. Martin is a Chicago area-based freelance writer/editor whose articles have been featured in AARP The Magazine, Reader's Digest, The Costco Connection, The Motley Fool and other publications. He often writes on topics related to real estate, business, technology, health care, insurance and entertainment. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content.

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