Buyers ask, how does ‘dual agency’ work?

Buyers ask, how does ‘dual agency’ work?
Date Published: June 17, 2011

Dear Kari,
My wife and I are first-time homebuyers and this whole experience of having to make so many decisions is really putting a strain on both of us. We found a home we liked during a Sunday open house. We called our Realtor right away and he offered to help us write the offer.
We understood most of the contract but when it came time to sign the dual-agency section, we did not understand and were uncomfortable. My parents have told us to never sign dual agency. The home is still for sale and we really want to buy it but we do not want dual agency.

This is a great question and a confusing topic for many.
When you are buying or selling a home, it’s important to understand the concept of “representation.” Understanding who is representing you and what they are bound, by law, to do for you is paramount to making an informed decision about who you choose to help you sell your home or to buy a new one.
The legal structure within which Realtors work is called “agency.”
A good analogy is a triangle: The brokerage firm a Realtor works through is the top point of the triangle. As the buyer or seller, you are the “principal,” or customer, the second point of the triangle.
The Realtor you hire is your Realtor, the third point. The three points form the agency, the legal structure.
Your Realtor’s responsibilities are defined by state law, the Realtor Code of Ethics (an industry guideline), and the general principles of agency (remember the triangle: the brokerage at the top; then the principal; then the Realtor).
It’s the duty of the Realtor you hire to exercise good faith, undivided loyalty to your best interest, and full and fair disclosure about the property and the transaction involved.
Real estate law imposes these duties on Realtors through various laws, rules and regulations.
Your Realtor’s duty to exercise undivided loyalty means that she or he must protect your position as the customer at all times and tell you any and all facts that may affect or influence your decisions regarding the property and transaction.
Also, your agent must obey all your instructions, as long as they are lawful, and keep your confidence.
With the growing number of very large and widespread brokerage companies, the issue of “dual agency” comes up frequently.
Let’s look at the case of two different real estate agents working for the same company. Even though they are clearly two different Realtors in the same sale, one is the buyer’s agent and the other is seller’s agent.
Yet, because both of the Realtors are working and governed under the same company and brokerage, this creates another form of dual agency.
Another instance of dual agency scenario is when one Realtor represents both the buyer and seller.
A Realtor may act as a dual agent only with the consent of all parties involved. The consent to dual agency must be by written agreement.
It requires each principal signing the form to confirm that they understand that the dual agent will be working for both the seller and buyer, that they understand that they may engage their own agent to act solely for them, that they understand that they are giving up their right to the agent’s undivided loyalty, and that they have carefully considered the possible consequences of a dual agency relationship.
Your Realtor will be there to answer all your dual agency questions and choices.
Remember it is your choice to select what is in your best interest.

Kari McCoy owns the Kari McCoy Group, Residential Real Estate, at Lyon Real Estate. Call her at (916) 941-9540 or e-mail her at