Dual Agency: Understanding the Dichotomy

In real estate transactions, it is common for the parties to be represented by different agencies, but there are exceptions when an agent acts as a “dual agent.” Dual agency is an agreement where an individual or entity represents both the buyer and seller in the negotiation of a property. However, this relationship can lead to a lack of impartiality, motivated by the agent's goal to secure the sale.

At Gomez Law, APC, we have dealt with cases of dual agency where the broker struggles to balance the interests of both clients. For example, if the seller fails to disclose structural issues with a dwelling, the agent may not be able to act in the best interest of both parties. Despite these potential challenges, dual agency is permitted in California as it simplifies the process for both parties and results in a quicker sale. Before entering into a dual agency agreement, it's essential to understand the implications and sign informed consent agreements.

Identifying Common Issues with Dual Agency

Before signing a dual agency agreement, it's crucial to understand the terms to avoid complicating the status of your asset in the future. In a dual agency situation, the agent has a fiduciary duty of utmost care, integrity, honesty, and loyalty to both the seller and the buyer. The agent also has a duty to disclose all relevant information affecting the value or desirability of the property. However, the agent may not disclose confidential information without the express permission of the respective party.

Some common issues with dual agency include:

Conflicts of interest: The agent may struggle to remain impartial, leading to conflicting interests.

Reduced transparency: Limited communication and information sharing between the buyer and seller due to the agent's access to confidential information from both sides.

Reduced bargaining power: The bargaining power of either party may be reduced as the agent may not be able to advocate as strongly for either side.

Reduced representation: The level of representation for either the buyer or the seller may be reduced as the agent's loyalty is divided between the two parties.

Reduced trust: Dual agency may result in reduced trust between the parties as both may question the agent's intentions and actions.

Pursuing a Transaction in California

In 2021, the real estate industry in California was strong, with a high demand for housing, low mortgage rates, and a growing population. This has led to a competitive market, with many properties receiving multiple offers and bidding wars becoming commonplace in certain areas. In California, the Department of Real Estate requires agents to disclose the dual agency arrangement and obtain written consent from both parties before engaging in a dual agency relationship.

Contact a Top Real Estate Attorney in California

If you are considering a dual agency transaction, it's essential to understand the potential future implications. At Gomez Law, APC, our experienced real estate attorneys understand the law behind dual agency transactions and offer English and Spanish consultation. Contact us today at (855) 219-3333 for a free 30-minute consultation.

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