Which States Illegalized the Dual Agency?

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Dual Agency Legality

In the typical real estate transaction, the buyer and the seller are represented by two different real estate agents. The buyer is represented by the buyer agent, while the seller is represented by the seller agent or listing agent. Each agent has a duty to protect the interests of their own client and get them the best deal possible. In a dual agency, there is only one real estate agent that represents both sides, the buyer and the seller.

What You Should Know

  • A dual agent is a real estate agent who represents both the buyer and the seller of the house
  • A dual agent should be neutral and not take sides in the real estate transaction
  • A designated agency is when the buyer agent and seller agent work under the same brokerage
  • Dual agency is illegal in 8 states, however, some of these states have designated representatives
  • A dual agent can give you a reduced commission, make the transaction more efficient and communicate faster with both parties
  • There is debate about the ethics of an agent fairly representing two parties with competing interests

Legality by State

StateNotes
AlabamaLimited consensual dual agency is allowed. The licensee should get written consent from both the buyer and seller and clients should be provided a Real Estate Brokerage Services Disclosure. Learn more...
AlaskaThe state does not allow dual agency, however, it allows designated agency when it is disclosed to the parties involved. Learn more...
ArizonaDual agency is allowed. One or two agents from the same brokerage can represent both sides of the transaction. A Limited Representation Disclosure Form is required. Learn more...
ArkansasDual agency is allowed, however, both the buyer and seller must have given written consent to this dual representation and should be aware of the possible conflict of interest. Learn more...
CaliforniaDual agency is allowed. An agency disclosure form is required to make the parties aware of the agency relationship. Learn more...
ColoradoIn Colorado, you are not allowed to work as a dual agent or a designated agent. The brokerage the real estate agent works for should only represent either the buyer or seller. Transaction brokers are allowed. Learn more...
ConnecticutDual agency is allowed as long as both the seller and buyer have consented to the dual representation. Learn more...
DelawareDual agency is allowed and it is assumed that you consent to it. If you do not consent, you have to sign a written agreement stating this. Learn more...
FloridaDual agency is illegal in Florida and there is no designated agency. A brokerage must work with only one side of the transaction. Transaction brokers are allowed. Learn more...
GeorgiaDual agency is allowed with written consent from the parties involved. Learn more...
HawaiiDual agency is allowed as long as the clients know how the representation works and give written consent to it. Learn more...
IdahoDual agency is legal, but written consent has to be acquired. Learn more...
IllinoisDual agency is allowed with consent. Learn more...
IndianaDual agency is legal, but written consent has to be acquired. Learn more...
IowaDual agency is legal, but a disclosed dual agency consent agreement should be provided to the clients. Learn more...
KansasThe state does not allow dual agency. A designated agency is allowed only if one of the agents from the same brokerage serves as a transaction broker. Learn more...
KentuckyBoth dual agency and designated agency are allowed in Kentucky. Parties should sign a form that describes types of agency relationships before signing the final contract. Learn more...
LouisianaDual agency is allowed only with the informed written consent of all clients. Learn more...
MaineDual agency is permitted only with the informed consent of all parties. Learn more...
MarylandMaryland does not define dual agency the same way as other states. It technically allows dual agency, which is in fact designated agency as per the state’s definition. One agent cannot represent two parties in a transaction. Learn more...
MassachusettsDual agency and designated agency are allowed in Massachusetts. Learn more...
MichiganMichigan allows dual agency and designated agency. Learn more...
MinnesotaDual agency is legal but there are no designated representatives in Minnesota. Learn more...
MississippiDual agency is legal with written consent but there are no designated representatives in Mississippi. Learn more...
MissouriA licensee can act as a dual agent as long as they have the written consent of all the parties in the transaction. Learn more...
MontanaDual agency is allowed but written consent has to be given prior to signing a contract with the parties. Learn more...
NebraskaDual agency is allowed with written consent but Nebraska does not have designated representatives. Learn more...
NevadaDual agency is allowed as long as there is written consent by the buyer and seller. Learn more...
New HampshireDual agency is allowed. The licensee should provide a written brokerage relationship disclosure to the consumer at the time of the first business meeting. Learn more...
New JerseyDual agency is allowed with the written consent of buyers and sellers. Learn more...
New MexicoDual agency is allowed but the dual agent must get written authorization from the buyer client and seller client in a form of a separate dual agency agreement. Learn more...
New YorkDual agency is permitted with written consent from both parties. Learn more...
North CarolinaDual agency and designated agency are allowed. The agent should get written consent from the seller before introducing a buyer that they are representing. Learn more...
North DakotaDual agency is allowed as long as there is written consent. Learn more...
OhioDual agency is legal in Ohio. Real estate agents must provide an Agency Disclosure Statement to the seller and buyer. Learn more...
OklahomaDual agency is illegal in Oklahoma and they do not have designated representation. Transaction brokers and single agents are allowed. Learn more...
OregonOregon allows disclosed limited agents. The agent needs to have written permission from all clients. Learn more...
PennsylvaniaDual agency and designated agency are allowed in Pennsylvania. Learn more...
Rhode IslandDual agency is allowed in Rhode Island and there are designated representatives. Learn more...
South CarolinaDual agency is allowed once written consent is acquired from both parties in a Dual Agency Agreement. Learn more...
South DakotaDual agency, also called limited agency, is permitted in South Dakota upon written consent from both parties. Learn more...
TennesseeDual agency is legal in Tennessee and there are also designated agents. Learn more...
TexasTexas does not allow dual agency but it has designated representatives. Learn more...
UtahDual agency is allowed in Utah and there are designated agents. Learn more...
VermontDual agency is illegal but there are designated representatives. Learn more...
VirginiaDual agency is legal in Virginia as long as there is written consent by the parties. There are designated representatives. Learn more...
WashingtonDual agents can operate with the written consent of both parties. There are also designated representatives in Washington. Learn more...
West VirginiaDual agency is allowed in West Virginia but there are no designated agents. Learn more...
WisconsinDual agency and designated agency are allowed in Wisconsin. Learn more...
WyomingDual agency is illegal in Wyoming, but there are designated agents. Learn more...

What is Dual Agency?

A dual agency is when a real estate agent represents both the buyer and the seller in a real estate transaction. In this scenario, the real estate agent would have to protect the interests of both parties. You can see how there can be a conflict of interest in this situation. The buyer wants to pay the lowest price possible for the house, while the seller will want to sell it at the highest price possible.

Moreover, real estate agents are required to disclose any important information with their clients, while maintaining the confidentiality of their client’s information. However, in a dual agency, this becomes tricky, and the real estate agent is required to remain neutral to both parties. Many states require for the dual agency to be disclosed to the parties involved before the start of the negotiations.

While not very common, dual agency usually happens when the buyer reaches out to a listing agent, or when the listing agent offers their services to a buyer at an open house.

Dual Agency VS Designated agency

There is another type of dual agency that happens when the seller agent and the buyer agent work from the same brokerage firm. It is considered a dual agency in some states, since the buyer agent and seller agent both work for the same broker, so besides their clients, they are also representing the interests of the same brokerage.

However, in other states, such as Colorado and Wyoming, this type of agency is called a designated agency and it is legal. In this scenario, the commission is split between the two agents, but the same brokerage gets a cut from each side. However, unlike in dual agency, in a designated agency, there is less potential for a conflict of interest.

Pros of Dual Agency

Although there is a lot of skepticism on the ethics behind dual agency, there are some benefits to working with a dual agent, which include:

Faster Communication - Since one real estate agent handles the negotiations between both parties, there is no delay in information. The chain of communication is shorter since the agent doesn’t have to speak to another agent and wait for them to discuss new information or offer with the seller or buyer.

Faster Closings - A dual agent knows the exact demands of both the buyer and seller, where there is room for negotiation and what aspects of the deal are off-limits. This and more efficient communication leads to a real estate transaction closing faster than it would have been with two real estate agents.

Reduced Commission - This might be one of the main benefits of dual agency. Since one real estate agent is representing both sides, they do not have to split the commission with someone else. This means that the dual agent would receive the whole commission. In this case, dual agents are more willing to give discounts on their commission. For example, instead of the 6% standard commission, a dual agent may accept 5%.

More access to the market - As we mentioned earlier, dual agency can also be the scenario where the listing agent and buyer agent work for the same brokerage. In big brokerages that employ both listing agents and buyer agents, it is very probable for a buyer and seller to hire agents from the same brokerage. Therefore, if you refuse to work with a seller/buyer whose agent works for the same brokerage as your agent, you would be missing out on a portion of the market that you would otherwise have access to.

Cons of Dual Agency

Dual agency presents a number of drawbacks which are mostly related to its conflict-of-interest nature. These include:

No agent advice - When handling a real estate transaction as a dual agent, the agent needs to be neutral to both parties. Since the buyer and seller have competing interests, the representing agent cannot provide advice or take sides. This means that you would not be able to get the typical support from your real estate agent, as you would if there were two separate real estate agents in the transaction.

Financial incentive - It may be difficult for the dual agent to stay neutral to the situation when their payment is on the line as well. Since the real estate agent’s pay will depend on the sale price of the home, they might be willing to provide advice during the transaction for the deal to result in the highest selling price, which would be unethical.

More room for mistakes- When there are two real estate agents involved in a transaction, there are fewer chances for things to be missed or overlooked. Therefore, while the whole transaction may take less time than it would with two agents, there is more probability for mistakes to be made.

Confusion - Sometimes, the potentially reduced commission and efficiency might not be worth the headache of dealing with a dual agent. A house is probably the biggest purchase you will make in your life, so you would want to be fully supported by your agent and as clear about the transaction details as possible.

Is Dual Agency Illegal in Some States?

Dual agency is illegal in 8 states in the U.S. These states include:

  • Alaska
  • Colorado
  • Florida
  • Kansas
  • Oklahoma
  • Texas
  • Vermont
  • Wyoming

It is worth noting that while these states don’t allow dual agency, there are some that do not consider a designated agency a dual agency. To clearly categorize the states and the legality of dual agency, we would also have to consider those that do not allow designated agency.

Maryland presents an interesting case as dual agency is technically legal, however, the definition of dual agency differs from other states. This definition describes the aspects of a designated agency.

How to avoid Dual Agency?

To avoid the confusion of the relationship the agent has with you and the other party, ask your real estate agent for a disclosure agreement. Make sure to ask questions about anything that you do not understand on the agent’s disclosure to feel more confident about the relationship the real estate agent has with all the parties involved in the transaction and the support you will receive from them throughout the home buying process.

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