In real estate, a dual agency relationship occurs when a broker represents both the buyer and the seller in the same transaction. This arrangement can present unique challenges, primarily because the interests of the buyer and seller may conflict. In dual agency, the broker must navigate this situation carefully, ensuring that both parties are treated fairly and that their confidential information is not disclosed to the other party without consent.
This relationship typically requires full disclosure and consent from both parties, as it can create potential issues with loyalty and fiduciary responsibility. The broker must maintain impartiality, which can be difficult due to the competing interests of the two parties involved in the transaction. Thus, becoming a dual agent means taking on the responsibility of managing both relationships simultaneously, adhering to all legal and ethical standards that govern real estate transactions.
In contrast, a single agency would involve the broker representing only one party in the transaction, while exclusive agency typically refers to a specific agreement type that dictates how a broker represents a client, often still in a single agency capacity. Transaction brokerage is a different type of relationship where the broker facilitates the transaction without being an advocate for either party, further emphasizing the significance of understanding dual agency in real estate practice.