What does "dual agency" mean in real estate?

Dual agency in real estate refers to a situation where one agent or broker is authorized to represent both the buyer and the seller in a transaction. This arrangement can create potential conflicts of interest, as the agent must balance the interests of both parties, who may have differing objectives in the sale or purchase of a property. The agent is required to provide full disclosure to both parties regarding their representation and must navigate the complexities of maintaining impartiality.

This situation is distinct from other scenarios in real estate practice. For example, when two agents represent a single buyer in different properties, that is not classified as dual agency but rather cooperative representation. Similarly, an agent working for two different brokerages doesn't create a dual agency situation unless they are involved in representing both parties in a specific transaction within the same brokerage context. Lastly, a legal agreement that allows an agent to represent multiple buyers does not establish dual agency as it does not involve the representation of opposing parties within the same transaction.