The Truth About Dual Agency in Real Estate: What Buyers and Sellers Need to Know
Your real estate agent is supposed to be on your side, fighting for the best deal for you. But what if they weren’t entirely in your corner? That’s the risk of dual agency, where the same agent represents both the buyer and the seller in a transaction. This arrangement can create a conflict of interest that limits how much the agent can truly advocate for you.
What Is Dual Agency?
Dual agency occurs when a single real estate agent, or agents from the same brokerage, represent both parties in a real estate transaction. Instead of having one agent dedicated to the buyer and another to the seller, the same person or firm facilitates the entire deal. While legal in some states, dual agency comes with strict regulations, including mandatory disclosure and written consent from both parties.
The Potential Risks of Dual Agency
Let's go deeper into why dual agency can be risky. The primary concern is that an agent’s role is to negotiate in the best interest of their client—but when they represent both sides, they can’t aggressively advocate for one without compromising the other. This means buyers might not get the lowest price possible, and sellers may not secure the highest offer.
Because of these concerns, some states have outright banned dual agency, while others allow it under strict guidelines. In Connecticut, dual agency is legal but requires full disclosure and written consent to ensure that both parties understand the potential risks.
How Dual Agency Affects Agent Compensation
One of the biggest financial incentives for dual agency is commission structure. In a traditional transaction, the seller’s agent and buyer’s agent split the commission—usually around 5-6% of the home’s sale price. However, in a dual agency transaction, the single agent keeps the full commission, potentially earning twice as much as they would in a normal sale. This financial incentive can lead some agents to push for dual agency, even when it may not be in the best interest of their clients.
For example, on a $500,000 home sale with a 6% commission, normally:
The seller’s agent gets 3% ($15,000)
The buyer’s agent gets 3% ($15,000)
In a dual agency deal, the single agent keeps the entire 6% ($30,000) commission. While some agents offer a reduced commission in these cases, it’s not guaranteed and should be discussed upfront.
How to Protect Yourself in a Dual Agency Situation
If you’re considering working with a dual agent, here are a few steps to ensure your interests are protected:
Understand the disclosure – Make sure the agent provides a written disclosure explaining dual agency and what it means for you.
Ask about commission – Find out if the agent is reducing their commission since they’re representing both sides.
Do your own research – Without full representation, you may need to be more proactive in researching comparable home prices and market trends.
Consider a real estate attorney – If you’re unsure whether your interests are being fully represented, a real estate attorney can help review the terms of the deal.
Final Thoughts: Should You Agree to Dual Agency?
While dual agency is legal in Connecticut and other states, it’s not always in your best interest as a buyer or seller. If you want an agent who is fully committed to advocating for you, it’s often best to work with someone who represents only one side of the transaction.
If you’re buying or selling and want an agent who puts your interests first, let’s connect. I’ll help you navigate the process and secure the best possible deal for you. Contact me today to discuss your real estate needs!