Everything you need to know about dual agency

State laws | Pros & cons | Commission savings | Negotiating tips | Exit strategies

What is dual agency?

Dual agency is when one agent represents both the buyer and seller in a real estate deal.

This sets up a potential conflict of interest: an agent is supposed to negotiate on their client’s behalf, but one agent representing both sides of a sale can’t negotiate against themselves.

Many states have regulations designed to protect sellers and buyers from being taken advantage of by dual agents or at least to require agents to clearly disclose potential conflicts.

Even with regulations, it’s hard for dual agents to remain neutral and respect their clients’ confidentiality.

Let’s say that, as a seller, you confide in your listing agent that you’re willing to accept an offer $50k below asking price. Your agent then represents a prospective buyer who wants to make an offer on your home. Can you trust that the agent is going to push to get you the highest price? Or will they disclose your "bottom line" to help their new client get a great deal?

Agents benefit from dual agency: By representing two clients at once, a dual agent can earn more commission from a single transaction.

Dual agent sales are also likely to be faster because a single agent can manage the timeline with no back-and-forth.

What is designated agency vs. dual agency?

Designated agency is when the buyer and seller work with two different agents from the same brokerage.

Though designated agency is slightly different than dual agency, some risks may carry over, including:

• Agents from the same office may be more prone to sharing confidential information, intentionally or unintentionally
• Brokerages might offer agents financial incentives to keep deals in-house, rather than marketing the home widely to attract the best offer

However, designated agency does ensure each party has an agent advocating on their behalf. As long as each agent is free to work independently, designated agency can help minimize the conflict of interest that occurs when one agent attempts to represent both sides.

Is dual agency legal in my state?

As of November 2020, dual agency is illegal in eight states: Alaska, Colorado, Florida, Kansas, Oklahoma, Texas, Vermont, and Wyoming.

Dual agency is legal in all other states and Washington, D.C., though regulations vary by state in three key areas:

• When during a transaction agents must disclose dual agency
• Whether your agent has to explain what dual agency is
• Whether buyers and sellers must agree to dual agency verbally or in writing

We’ve boiled down the need-to-know information about dual agency regulations in all 50 states and Washington, D.C.

Dual agency regulations by state

Pros and cons of dual agency

Dual agency doesn’t just benefit the agent — it can also benefit the buyer and seller.

Of course, dual agency carries some significant risks as well — particularly if you don’t fully understand them.

Before proceeding with a dual agency sale, be sure to weigh the potential benefits against the risks, vis-a-vis your specific situation.

If you do choose to move forward, we’ve outlined some helpful considerations and tips so you can proceed with confidence.

Pro: You may be able to save money

When only one agent is involved in a sale, the seller only has to pay that one agent instead of two. This lowers the overall cost of the transaction, typically resulting in 1-2% savings or more.

These savings give both parties more wiggle room in negotiations. After a deal closes, the seller may walk away with more profit, the buyer may have secured a lower price, or maybe a combination of the two!

Pro: Could make the sale faster and easier

In some cases, dual agency allows you to skip the listing or house hunting process altogether. This most commonly occurs when an agent:

• Finds a buyer who’s a great fit for one of their sellers
• Signs a seller whose listing is an exact match for an existing buyer’s criteria

Dual agency also results in more direct communication. Because both parties share one agent, you’ll never have to wait for a complicated back-and-forth mediated by multiple agents.

Con: You’ll have to be your own advocate and negotiator

Because the agent must serve both clients equally and fairly, they technically can’t try to sway either party while attempting to close a deal. That means it’s on you to handle all negotiations and advocate for your best interests.

Con: Agent may reveal confidential information to other party

Dual agents are technically supposed to be neutral parties — but they’re also highly motivated to get the deal done.

They’re often privy to information that can factor into negotiations, such as both parties’ bottom lines, the motivations for selling or buying, and so on.

The dual agent may use or share that information — intentionally or even accidentally — to close the deal, which could negatively affect one of the parties involved.

While this is technically illegal, it does happen often. If you think you’ve been defrauded or misled in a dual agency sale, you may have legal recourse.

Con: Less competition could keep you from getting the best price

Often, dual agency happens when an agent realizes they have an existing buyer who would be a good match for one of their listings. This can bring speed, convenience, and potential savings for the seller.

But it’s not always the best option. In a high-demand market, listing the property to the widest possible audience can spark competition and potentially drive up the sale price.

It really comes down to your priorities — speed and convenience versus price — so talk to your agent about your options. Your agent is technically obligated to look out for your best interests, and a good agent will be honest in helping you make the right call.

But keep in mind that agents stand to earn more through dual agency. If your agent is overly pushy or dismissive of your concerns, consider it a major red flag.

How does dual agency impact commissions?

Dual agency’s biggest perk is that it can help sellers save on commission.

Sellers typically pay a 5.5-6% commission that’s split between their agent and the buyer’s agent. A dual agent gets to keep the entire commission, also known as "double ending" a sale.

Many dual agents are willing to reduce their commission, so don’t be afraid to negotiate. They’ll still earn more from a dual agency sale than a traditional transaction in which the commission is split between two agents.

Here’s a simplified example that illustrates how the numbers could break down for a standard 6% commission:

• In a typical sale, each agent would receive around 3%
• In a dual agency sale, the agent could reduce the commission to 4%
• This would result in a 1% higher commission for the agent and 2% savings for the seller

In practice, the final commission rate could be more or less.

As you negotiate your agent’s commission rate, ask about variable rate commission. This means your agent would charge the full commission rate if the sale closes with another agent or a reduced rate if it is a dual agency sale.

Who should consider dual agency?

• Sellers: Sellers stand to gain the most benefits from dual agency. They are responsible for paying agent commissions, so any savings directly impact their bottom line. Plus, a higher sale price results in a higher commission fee, presenting a win-win for sellers and dual agents.
• Experienced sellers and buyers: People who are deeply familiar with the ins and outs of real estate sales can confidently navigate a transaction without an agent’s help. They know what red flags to watch out for and are well prepared to advocate for themselves.
• Real estate investors: If speed is imperative and you’re comfortable navigating a sale yourself, dual agency can save countless headaches and help you close more deals, faster.
• Prearranged deals: If family members or friends are comfortable with the terms of a prearranged deal, a dual agent can quickly finalize the transaction while helping to keep costs down. (Note: It may be less expensive to hire a transaction coordinator or real estate attorney, so be sure to price out all your options.)

Who should avoid dual agency?

• Inexperienced sellers and buyers: If you’re unsure of how to negotiate and advocate for yourself, dual agency means you won’t have an experienced agent guiding you through the transaction.
• Buyers in low-competition markets: Independent buyers who are shopping in a buyer’s market have little to gain from dual agency. Since the seller pays the buyer’s commission, there’s virtually no reason to skip the opportunity to benefit from an agent’s expertise.

» MORE: Find top agents near you.

Negotiating in a dual agency sale

In a dual agency sale, your agent is technically an impartial mediator, so you’ll be in the driver’s seat when it comes to negotiating the terms of the deal.

Remember, everything in real estate is negotiable—so don’t be afraid to push for the things you want!

To set yourself up for success at the negotiating table, be careful about what information you disclose to a dual agent.

For example, avoid sharing your bottom line, motivation for selling or buying, or required timeline. This type of information increases the risk of confidentiality breaches that could jeopardize your negotiating power.

Tips for buyers

In a dual agency deal, many buyers will attempt to make a lower offer or negotiate a lower sale price, knowing the seller is paying less in realtor commission fees.

Dual agents won’t be able to advise you on how hard to push on price, so do your own research. Ask your agent for comps (recent sales prices for similar homes in your area) that justify the listing price. Then, confirm their findings by looking at similar properties in the area, focusing on the price per square foot and interior finishes

Tips for sellers

Because buyers understand that sellers often have some wiggle room in a dual agency deal, they may ask for repairs or concessions while negotiating.

It’s crucial to compare the buyer’s estimate to your own quotes from trusted contractors. Sellers who aren’t familiar with repair costs can easily be taken for a ride.

Dual agency exit strategies

If you’re looking to avoid or get out of a dual agency situation, your options will depend on how far into the process you’ve gotten.

Want to avoid dual agency?

Most states require agents to obtain consent from both parties before proceeding with a dual agency sale. If you don’t feel comfortable with dual agency, you don’t have to agree to it.

The most common dual agency scenario is when an agent receives an inquiry about one of their listings from an unrepresented buyer. In this case, avoiding the dual agency situation is relatively straightforward:

• Sellers: Tell your agent you want the buyer to secure separate representation before proceeding.
• Buyers: Tell the listing agent you're going to find your own agent.

Backing out of a dual agency agreement

If you’ve agreed to dual agency sale but have a change of heart, it is possible to change course.

Before attempting any drastic changes, we recommend talking to your agent. Explain what’s making you uncomfortable or unhappy, and see if they can adjust. For example, your agent might be able to bring another agent from their brokerage into the deal.

If you’ve already signed a contract and decide that it’s just not working out, it is possible to change agents. The next steps will be different for buyers and sellers.

Advice for buyers

If you’re buying, changing agents breaks down into two distinct situations. The deciding factor is whether the buyer has signed a broker’s agreement:

• If you signed a broker’s agreement, read your contract to see how much flexibility you have. Are there any limits on working with another broker? Are there any limits on canceling?
• If you’re working without a broker’s agreement, you’re free to leave at any time — though it may feel awkward to broach the topic. Follow general communication best practices by being upfront, clear, and firm about your decision.

Advice for sellers

If you’re selling, there may be more barriers to changing agents. Your contract will spell out any limitations or processes you’re legally obligated to follow.

You may have to:

• Prove that your agent isn’t doing their job adequately
• Compensate your original agent, if they’ve put in a significant amount of work
• Pay your agent’s commission, if you signed an exclusive right-to-sell agreement
• Observe an agreed-upon timeline

Keep in mind that many contracts expire after a period of two to six months. If you’re close to your contract’s end date, you may want to just wait it out.

» MORE: Try Clever's free agent-matching service.

What to do if you feel misled or defrauded by dual agency

If you feel defrauded or misled by a dual agency sale, you may have legal recourse.

Most state regulations prohibit dual agency situations in which the agent:

• Fails to follow state regulations
• Doesn’t take the proper steps to get your consent
• Misleads you about the home’s value
• Doesn’t disclose known problems with a property
• Discloses confidential information to the other party

These types of lawsuits aren’t uncommon.

For example, in 2019, celebrity realtor Ryan Serhant faced a $1M lawsuit when a past client alleged that he failed to disclose that he represented both the buyer and seller. Similarly, a still-ongoing class action lawsuit alleges that New York brokerage Houlihan Lawrence pushed dual agency deals that resulted in distorted pricing.

If your experience appears to violate local regulations, we recommend getting in touch with a qualified real estate attorney to discuss your options.

Taking legal action can be expensive, time intensive, and stressful — but considering that your home is likely your most valuable asset, pursuing justice may be well worth the investment.