What action can a licensee take if a client refuses to consent to a dual agency relationship?

Are you wondering what dual agency is and how it works? One of my duties as a real estate agent is to explain how agency law works in Massachusetts. I am required by law to present agency law at my first meeting with a prospective buyer or seller client. State laws require agents to do this.

Real Estate agents can essentially do one of three things; represent a seller, a buyer, or both.

There are two types of dual agency transactions. One is acceptable, and the other is not. We will cover both.

When a single real estate agent works with both parties in a real estate transaction, it is known as dual agency. In this scenario, you have a single agent working with a buyer and a seller. The parties do not have their own agent – they have a dual agent. This dual agency situation is terrible. There are conflicts of interest.

One of the key takeaways in this scenario is that a dual agent does NOT represent you!

The second form of a dual agency relationship is when two agents from the same real estate brokerage each represent a buyer or seller. This is an acceptable form of dual agency that happens in a significant amount of real estate transactions daily with no problems. Each consumer has different agents who are fighting hard for the best deal possible.

There are separate agents. The buyer’s agent is looking for home buyers to get a lower price and other more favorable terms. The selling agent is fighting for the highest price and other terms that would benefit the home seller.

Many Real Estate Agents Neglect to Explain Dual Agency and a Dual Agent Relationship

Over the years, many buyers and sellers have asked me how dual agency works. They are asking for a good reason – it can be highly confusing to laypeople. Unfortunately, many real estate agents don’t explain it adequately either, making things even more difficult.

Most people recognize the benefits of working with an exceptional real estate agent. You get a representative that fights for your best interests, helping you seek your real estate goals while protecting you from situations that would be detrimental.

From finding the perfect house to negotiating the price, negotiating the home inspection, and closing the deal, your agent is there for you.

Unfortunately, it is possible to wind up with an agent legally prohibited from looking out for you and representing your interests as a fiduciary. With dual agency – when a single agent represents both buyer and seller – the agent can’t push for what is best for you or the other client. There is no fiduciary duty. Fiduciary duties don’t exist.

The agent collects twice the commission but does almost none of the specific work of a seller’s agent or buyer’s agent. Dual agency only benefits the agent and should be avoided at all costs if you want a positive buying or selling experience.

Many real estate agents fail to carry out proper dual agency disclosure. It is these agents that don’t want you to know how bad it sucks. Do you think an agent who practices dual agency and would love the opportunity to become a dual agent is going to explain to you why it’s an awful arrangement? Fat chance!

The person who would love to become a dual agent will tell you it’s legal and there is nothing wrong with it. A real estate broker who does this is looking out for numero uno.

Greed Induces The Desire to Be a Dual Agent

If you do an online search for “what is dual agency,” or “how does dual agency work,” or “what is a dual agent,” you are bound to see some articles from real estate agents saying dual agency is perfectly fine. Do you know why a real estate agent would ever tell anyone that dual agency can be done with no problem? In a word, GREED!

Getting both sides of a transaction is super attractive.

Who wouldn’t want to get paid a double real estate commission? There are a lot of hands going up in the room. The problem is single-agent dual agency benefits nobody but the real estate agent! In this scenario, the agent gets the entire commission.

Unfortunately, for many agents, the dual agency arrangement is the opportunity for a larger commission that is too great to pass up.

This is kind of like the real estate agent who says an open house is needed to sell a home. Wrong! It is an archaic form of marketing that benefits the agent far more than the client. It puts the owner’s home in danger of theft, all for the chance for the agent to score clients for other properties or double side a deal.

Dual Agency – A Departure From The Duties Of A Realtor

Your Realtor will keep your information confidential and be accountable to you as the buying or selling process progresses. They will also disclose all the information that is relevant to you as a client.

Ultimately, your agent will be loyal to you – seeking to find the best path to what you want as an outcome. They have a fiduciary responsibility ONLY to you.

With single-agent dual agency, all the standard rules and expectations go out the window. To explain this better, let me give you the definition of each type of agency.

What is a Seller’s Agent?

Seller’s Agent – A seller can engage a real estate agent’s services to act as a seller’s agent to sell the owner’s property. The agent represents the seller as a client.

An agent owes the seller client undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality, and accountability. The agent must put the seller’s interest first and attempt to negotiate terms acceptable to their seller client.

The agent must put the seller’s interest first and attempt to negotiate terms acceptable to their seller client. Here are what sellers should expect from their listing agent.

What is a Buyers’ Agent?

Buyer’s agent – A buyer can engage the services of a real estate agent to act as a buyer’s agent in purchasing a property. The agent represents the buyer as a client.

An agent owes the buyer client undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality, and accountability.

The agent must put the buyer’s interest first and attempt to negotiate terms acceptable to their buyer client.

Here are some things you should expect from a buyer’s agent. Buyer representation is worth having.

What is a Dual Agent?

Dual agent – A real estate agent may act as a double agent representing both the buyer and the seller in a real estate transaction but only with both parties’ express consent. A dual agent shall be neutral concerning any conflicting interests of the seller and buyer. A dual agent is similar to a transaction broker in the fact you become neutral.

There should be no favoritism of either a buyer’s interest or a seller’s interest.

Consequently, a dual agent cannot fully satisfy the duties of loyalty, full disclosure, and obedience to lawful instruction. A double agent does, however, still owe a duty of confidentiality of material information and accounting of funds. Confidential information cannot be exchanged. Written consent for dual agency should come from both the buyer and the seller.

Does dual agency sound like anything that would interest you? If I haven’t made it clear that dual agency is the DUMBEST thing ever invented for the real estate industry, keep reading.

The definition of a dual agent should be changed to the person who won’t perform typical real estate services but will make a double commission.

What is Designated Agency?

Designated Seller’s and Buyer’s agent – In Massachusetts, designated agency within a real estate firm is allowed. A designated agency is when one agent within the firm represents the seller, and another represents a buyer. Only your designated agent represents your interests. A real estate licensee, typically the broker of record, is the one who designates the agents to represent different parties in the transaction.

In this arrangement, the broker of record becomes a dual agent. Consequently, a double agent cannot fully satisfy the duties of loyalty, full disclosure, and obedience to lawful instruction, which is required of a seller’s or buyer’s agent. Written confirmation and agreement are mandatory by both a buyer and seller in a designated agency relationship.

With this arrangement, each of the parties has representation. This is the second form of dual agency agreement discussed when giving you the definition of dual agency.

Dual Agency is Working With, NOT Representing The Buyer And The Seller

If the situation seems confusing, that’s because it is. How can a Realtor effectively represent either side while also serving the needs of the other?

You can’t. It is impossible to serve two masters in a real estate transaction sitting on the opposite sides of the table.

What makes it even more strange is that there are often laws and regulations prohibiting dual agents from doing their duty for either client.

The Massachusetts Board of Registration of Real Estate Brokers and Salespeople dictates that “a dual agent shall be neutral concerning any conflicting interest of the seller or buyer.”

So, not only does the basic arrangement of dual agency make it quite challenging to serve the interests of either buyer or seller, regulations state that the agent can’t even attempt to represent the interests of one or the other.

Participating in dual agency as an agent would be comparable to an attorney trying to represent both a plaintiff and a defendant in a lawsuit. That would work out well, wouldn’t it? Being a dual agent is the same dam thing!

During the transaction, there will be times when one party feels like the other is getting preferential treatment. Unfairness, however, isn’t even the worst of dual agency.

Real-World Example of Why Dual Agency is Bad

I list a home on Main Street for $500,000. I go about marketing the property. Someone calls me from seeing it online and asks me to show it to them. I show the buyer the property the home, and they love it.

The buyer says, “Bill, I want to make an offer.” I say that’s great. The buyer says, “so what should I offer?” I say sorry I can’t help you with that, remember I am a dual agent.

The buyer is on their own. After a few blank stares, the buyer says I want to offer $490,000. I then take the offer to the seller, and they tell me, “Bill, what do you think?” “Should I give them a counteroffer, and if so, what should it be?”

My legal response should be, “I can’t help you with that as I am a dual agent.”

Legally no party has any proper representation when practicing dual agency. It is a LOSE-LOSE situation for both buyer and seller. At $490,000, the potential buyer could be significantly overpaying for the property. They might also be underpaying as well. Nobody has any guidance. One of these parties could be making a big mistake. In this situation, the only person making out is the real estate agent.

This is just one example of how dual agency is bad for both the buyer and the seller. And just think the transaction is just getting started.

Questions a Dual Agent Cannot Answer

Want more examples of how a dual agency agreement is a horrible arrangement in a real estate transaction? Take a look at some of the questions below that a dual agent cannot answer.

• How much is the property worth?
• Is the Zillow Zestimate accurate on the home?
• What should I offer for the home?
• What should my counteroffer to the buyer be?
• Is there anything near the property that could impact the market value?
• Are there any reasons why I should not go through with the home-buying process?
• Is there a sex offender living near the home?
• What repairs or concessions should I ask for from the home inspection?
• Are the buyer’s repair requests reasonable? What should I agree to fix?
• What happens if I need to dispute a low home appraisal? Who will help me?

When purchasing a home, not having a buyer’s agent is foolish and could cost you lots of money. The same can be said of not having representation as a seller.

One of the significant reasons a buyer or seller hires a real estate agent is to get solid counseling and advice from an expert. When you agree to dual agency, you can kiss that luxury goodbye. A dual agent cannot give you counseling and advice – it is illegal to do so.

Dual Agency is Illegal in Some States

Some people ask the question of whether dual agency is illegal in some states. The answer is yes; dual agency is illegal in some states.  Dual agency is forbidden in these states: Alaska, Colorado, Florida, Kansas, Oklahoma, Texas, Vermont, and Wyoming.

The answer on why dual agency is illegal in some states is simple  – it doesn’t benefit consumers. These states have concluded that it should not be allowed. Frankly, it should not be legal anywhere, so I applaud these states for taking bold action.

The Consumer Federation of America reports on how poorly real estate agents make proper dual agency disclosure.

Improper Handling of Dual Agency

Many agents will do as they please and advise one party or the other throughout the transaction. One day they could be acting as a sellers’ agent, and the next day the buyer’s agent.

For example, do you know how many times agents illegally give both the buyer and seller advice on an offer? A ton! From the agent’s perspective, all they care about is consummating the deal to get paid DOUBLE.

Realtors are supposed to follow a strict code of ethics, but many choose not to.

If you are lucky and the agent likes you, they might even show you some favoritism. Kind of a horrible arrangement to be wondering whether today is the day the relationship will favor you or not!

Folks, this happens every day and all for the agent’s ability to make double the money in a transaction.

A Harmful Arrangement

If you are wondering why dual agency even exists, you are not alone. As previously mentioned, some states have made the practice illegal, but many other states – like Massachusetts – still allow the procedure to occur.

As a buyer or seller, you will gain no benefit from dual agency. The chances are excellent you will be harmed by it.

All the benefits you would get from hiring a real estate agent while you agree to pay their fee are lost when you work with an agent representing both you and the other side. You, as a client, are harmed by the practice.

When you consider that buying or selling a home is probably one of the most significant financial transactions of your life, it becomes even more baffling why dual agency is allowed at all.

Part of why you are hiring a professional real estate agent is because you know that buying or selling a home is a big deal, a decision that will affect you for years or even decades.

It only makes sense to want reassurance that your representative has your best interests at heart.

Dual Agency Can Happen Under The Radar

One of the significant risks with dual agency is that it can’t control what is being said by the dual agent throughout the transaction. Some Realtors may not even consider the damage done to their clients – they may only see the doubled paycheck. The chance for dual agency can pop up at pretty much any time in the home buying or home selling process.

Are There Any Pros to Dual Agency

Here are some of the pros of dual agency from the mouth of babes:

1. You will get better communication because there is only one agent – Yahoo! With a big grin. Really?
2. The listing agent will have more information than a buyer’s agent would. Ya phone calls or emails are hard to make asking questions.
3. A dual agent may agree to a reduced commission because they have both sides of the transaction. OKAY –  that may be true, but who is getting the discount buyer or seller? Is saving a few dollars worth it for what you give up. I don’t think so! A lower commission should never be the basis for working with a dual agent.

There are far more cons to dual agency than any of these potential advantages.

What About Designated Agency?

Designated agency is when two agents from the same firm are involved in a real estate transaction. One agent represents the buyer as a buyer’s agent, and the other represents the seller as a seller’s agent.

I have no problem with this arrangement whatsoever, as each party has representation. Some people have issues with designated agencies because the company’s owner becomes a dual agent representing neither party. I say so what!

How often does the owner of a real estate company get involved with negotiations in a sale? Try rarely! Even if they do, you would want them to be a neutral party, not someone who favors one party over another.

The folks who have a problem with designated agency usually advocate for firms that just do buyer’s agency. Think firms that only offer buyer’s agency brokerage relationships.

Designated agency and dual agency are two very different things!

Single Agent Dual Agency Starts With The Listing Agent

When you sell your house, you’ll likely meet with a few potential real estate agents before choosing one and signing a listing agreement. One of the most significant aspects of your home sale will be to find out where the agents stand with dual representation. As you’ve probably realized, it will be a good idea to reject the practice of dual agency.

You will need to clarify that you have no interest in the dual agency scenario where they become a dual agent. When you list your home, your desire to have an agent acting on your behalf should be emphasized.

There should be a written agreement that says there will be no dual agency. Most listing agreements will contain a section discussing dual agency. Read it over carefully. State laws require agency disclosure.

When selling a house, you will be the one paying the real estate commission. Why would you ever want your selling agent not to represent you? Get a different real estate agent if they will not comply.

Home Buyers Should Avoid a Dual Agent Too

On the other side of the coin, it makes sense for a buyer to have a buyer agent. Someone who will be looking out for the buyer’s interest. An agent who will work hard to get the best possible deal or the lowest price. Entering into a single-agent dual agency transaction will likely not allow that to happen.

Insist On A Dedicated Real Estate Agent

The best way to avoid dual agency is to hire a Realtor from a trusted company in your area and discuss the issue before moving forward with an agent.

You can demand that the agent that you choose not to engage in dual agency with you. As long as the agent is reputable and honorable, they are unlikely to promote dual agency.

If you are selling a house, you should outright reject dual agency. It would be best if you insisted that the agent you hire is a seller’s agent, and that’s it. If the agent has a problem with that, then you know you’re dealing with someone who cares more about their pocketbook than your best interests.

You’ve probably guessed already one of my biggest pet peeves as a real estate agent are other agents who put their interests ahead of the client. Being selfish repeatedly happens in real estate when Realtors push open houses without explaining the drawbacks to homeowners.

Final Thoughts

Agency law differs from state to state. It is crucial to understand how agency law works in your state. The bottom line is that dual agency offers far more disadvantages than advantages to consumers. Make sure you understand any document you are signing when it comes to agency relationships.

Frankly, dual agency should be outlawed in every state. Dual agency = conflict of interest. Real Estate agents who practice dual agency dramatically increase their chances of being sued.

Hopefully, you now understand what a dual agent is, how dual agency works, and why you should avoid it.

Additional Helpful Information on Dual Agency

• Facts about dual agency in Massachusetts  – get more information on how being a double agent works in Massachusetts via Mass.Gov.
• Difference between buyer’s agent and seller’s agent  – learn the critical differences between a buyer’s agent and a seller’s agent via Maximum Real Estate Exposure.
• Should I Allow Dual Agency – see any explanation on why you should not allow dual agency via Kyle Hiscock at Slideshare.

About the Author: The above Real Estate information on what dual agency is and why buyers and sellers should avoid it was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 34+ Years.

Are you thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.