Are you buying or selling a home right now?
Most people assume the buyer and seller will each have their own real estate agent.
But in a dual agency transaction, the listing agent can also act as the buyer’s agent.
That means the buyer and seller share the same agent, also called a dual agent.
Sounds risky?
It usually is.
I’ve seen dual agency cost buyers and sellers serious money (I’ll tell you how).
It’s one of the main reasons SoldNest exists.
Here’s everything you need to know about dual agency, including what it is, how it works, and why you should probably avoid it.
What is dual agency in real estate?
Dual agency is an agency relationship where the same real estate agent or brokerage represents both the buyer and seller in the same transaction.
The agent in that arrangement is called a dual agent.
Dual agency requires written disclosure and informed consent from both parties.
Sellers usually agree to it when they sign the listing agreement.
Buyers typically acknowledge it by signing the agency disclosure with a buyer broker agreement or as part of the purchase contract.
Once the offer is accepted and the disclosure is signed, the dual agency relationship is in effect.
On paper, the agent still owes fiduciary duties to both sides, which is exactly why it can get messy fast.
Who pays commission in dual agency?
Who pays commission in a dual agency sale depends on whether the seller agrees to cover buyer-side compensation in the offer.
If the buyer asks the seller to cover the amount tied to buyer representation and the seller accepts, the seller pays it at closing.
But the buyer is the one who pays that amount if the seller does not agree to cover it.
The bigger issue in dual agency is who collects the real estate commission.
In a non-dual agency sale, there is a listing agent and a buyer’s agent.
The compensation is paid to each agent’s brokerage based on the agreements in place.
But that’s not the case when the same agent is representing both the buyer and the seller.
In a dual agency transaction, compensation is paid to one brokerage.
Which means a dual agent (and their brokerage) get two commissions when representing both sides.
Why dual agency is risky
The opportunity for a real estate agent to earn more commission is the reason why dual agency is high-risk.
It’s an open invitation for the agent to put the seller’s and buyer’s best interests below their own.
One agent can’t fully advocate on price and negotiation for both sides.
They can certainly referee the transaction.
But it’s nearly impossible to give advice to both parties and act with 100% integrity.
That’s why it’s almost always best to avoid a dual representation scenario.
Why dual agency is bad for sellers
The outcome is almost never good for a seller when their listing agent also becomes the buyer’s agent.
Why?
Because the sale price is often much lower than it should be, without the seller ever knowing.
Real example: How sellers can lose money in dual agency
Before SoldNest, I had buyer clients who fell in love with a home after looking for several months.
So we put a great offer together that included:
- An offer price of $1,840,000 (higher than the list price of $1,799,000)
- No contingencies and a 25-day close
- A Wells Fargo pre-approval with a 30% down payment.
It took a full day — plus follow-ups by email, text, and phone — to get confirmation the listing agent even received our offer (not normal).
The next day, he emailed: “Thank you, but the sellers have decided to accept another offer.”
That kind of response from a dual agent to a buyer’s agent isn’t unusual.
Zero effort to negotiate for the seller is a strong sign the listing agent is representing both sides.
It’s also one of the signs of a bad real estate agent.
The home closed about a month later for $1,810,000.
That’s $30,000 less than what my clients offered (and they would have gone higher).
I can’t tell you exactly what the sellers were told behind the scenes.
But I can tell you this…
Dual agency creates a built-in incentive problem.
The dual agent pockets more money, but the seller walks away with less.
That unacceptable risk is why sellers should almost always avoid dual representation.
Why dual agency is bad for buyers
Many buyers assume working with a dual agent will get them a “better deal.”
In some cases, it can.
But dual agency can be bad for a buyer because they’re working with an agent who is representing the party with opposing interests.
And that agent is financially motivated.
It’s usually too late by the time a buyer realizes the repercussions.
This review left on a real estate site is a good example:
Buyers like this often discover issues with the property that should have been disclosed prior to the sale.
That usually includes situations like:
- Bad neighbors
- Neighborhood noise
- Crime
- A death on the property.
A home inspection can become a bigger issue when a buyer is engaged in dual agency.
Some dual agents discourage due diligence or avoid pushing the seller to cover repairs found in the inspection report.
That’s one example of how a buyer caught in a double-sided transaction can end up paying more than the “deal” is worth.
And why buyers should almost always have single-agent representation.
Common dual agency scenarios (and red flags to watch for)
The incentive for a higher commission influences how a dual agency scenario can present itself to you.
That’s important because it can affect the agent’s intent.
So use discretion and proceed with caution.
Red flags for sellers
Here are two common ways dual agency shows up for homeowners.
An offer from your listing agent’s buyer
This comes up when your home is already on the market.
If your agent brings you an offer and says they’re also representing the buyer, ask these two questions:
- Is this the only offer you’ve received?
- What are your thoughts about counteroffering on price?
The first question will help you hold your agent accountable.
The second tells you their intent.
An immediate reply like, “I don’t think there’s any room” or “I don’t think that’s a good idea” is a red flag.
The agent is indicating they’d rather keep the buyer comfortable than risk losing a higher commission.
Selling off market to a buyer
You might hear an agent say, “I have a buyer who’s looking for a home like yours.”
Sometimes it’s a way to get a foot in the door to win your business.
Other times it’s true, and they do have an active buyer looking for your type of home.
In this situation, it’s common for an agent to pitch the “benefits” of selling off-market.
But skipping the open market is the gateway to a lower sale price.
So if this comes up, be sure to ask:
- What’s the average days on market for homes like mine over the last ~90 days?
- What do you think we could get if we list it publicly?
Get the answers in writing.
Any agent can pull days on market from their local MLS and provide a comparative market analysis (CMA) to give you an estimated selling price.
But an agent who is trying to double-end a deal may very well try to price it conservatively.
So solidify their intent by requesting a CMA from another agent (two would be better).
Red flags for buyers
Here are two common situations in which buyers get pulled into dual agency.
Approached by the listing agent
Many buyers inquire about a property with the seller’s agent (or an agent on their team).
This most often happens at an open house.
The buyer will usually ask questions like, “Why are the sellers selling?” and “What are the seller’s expectations?”
Some conversations are brief.
But others continue because the buyer shows real interest by asking questions their own agent should be asking.
Most listing agents can spot this quickly.
That’s usually when they’ll ask if the buyer is working with another real estate professional.
If you answer “No,” there’s a good chance you’ll get pitched a dual representation scenario.
This is when you’ll want to clarify the agent’s intent.
Ask them: “How can I benefit if I share the same agent as the seller?”
Pay close attention to how they respond.
The red flag is anything other than, “You can’t.”
Because anything other than the truth suggests they’re willing to spin the situation.
And that’s a bad sign if you’re buying a home in a dual agency arrangement.
Presented with an off-market deal
Sometimes an agent working with a buyer will have a listing coming soon that fits what their client is looking for.
Many buyers see this as a great opportunity, especially in a low-inventory market.
And in some cases, it can be.
But ask yourself this…
Why does the agent want to sell the house off-market?
The typical answer is, “The seller doesn’t want to deal with the hassle of showings.”
Showings and open houses can be an inconvenience.
But that inconvenience can be minor compared to what a seller can lose by not listing on the open market.
That’s why the majority of sellers want maximum exposure for their home.
So treat it as a red flag if your agent is pitching an off-market opportunity while also representing the seller.
Because it suggests you’re working with an agent who is prioritizing their own interests above either client’s.
When dual agency might make sense
Sometimes dual agency can work.
Here are three scenarios where sharing the same agent can make sense for both sides.
When the seller and buyer know each other
Working with a dual agent can make sense when the buyer and seller already know each other (like family or close friends).
Why?
Because the big negotiation points are often settled up front.
In that case, the agent is mainly there to coordinate the paperwork and keep the sale moving.
When the listing agent is willing to reduce their commission
In many transactions, two different agents earn a total commission of around 5-6% of the final sale price.
Some agents might be willing to reduce this total in a dual agency scenario.
Something like 6% to 5% or 5% to 4%.
The problem with this is that they’d still be making more money than they would if there were two separate agents.
And that increases the chances of the agent not acting in the best interests of either party.
But there is a scenario where a dual agency arrangement can make sense for both the buyer and the seller.
When the agent is willing to forfeit a higher commission.
Eliminating the amount that would have been paid to the buyer’s agent reduces the chances of the shared agent risking their integrity.
When both parties are fully aware of dual agency drawbacks
Some agents don’t explain the disadvantages of dual agency.
Why?
Because they’re afraid that the buyer or seller won’t want them to represent the other party.
In other words, they don’t want to risk losing the double-ended commission.
But it’s a good sign when an agent fully discloses what a dual agency transaction changes.
It shows that they’re being up front.
So working with a dual agent could make sense if the buyer and the seller are:
- Fully aware that the agent can’t negotiate on their behalf to the best of their ability
- Informed that the agent also has a fiduciary duty to the other party
- Conscious about the agent’s commission
- Comfortable with the price and terms.
How to avoid dual agency
Dual agency is easiest to avoid before you commit to working with an agent.
Here’s how to prevent dual representation from becoming the default.
For sellers
The best way to avoid dual agency is to bring it up when you’re interviewing agents.
Tell them you don’t want them representing the buyer.
And when they bring up the listing agreement, don’t treat the agency disclosure language like a formality.
Read it and ask them to clarify what it means.
Here are a few simple rules that help you avoid dual representation:
- Put it in writing that you don’t want dual agency.
- When an offer comes in, confirm who represents the buyer.
- Be cautious if your agent is pitching an off-market sale.
- If your agent keeps steering you into dual agency after you’ve said no, be prepared to fire your agent.
Seller script:
“I’m not comfortable with dual agency. If your buyer wants to submit an offer, I’d like the buyer to have separate representation.”
For buyers
Dual agency often starts when you don’t have a buyer’s agent and you reach out to the listing agent about a home you like.
The conversation can quickly turn into, “I can help you write the offer.”
If you want to avoid that, make your representation decision early.
- Have your own agent before you fall in love with a house.
- Tell your buyer’s agent up front that you don’t want dual agency, and you want separate representation on any home you buy.
- If you’re asked at an open house whether you have an agent, tell them you’re already working with someone.
Buyer script:
“I’m not comfortable sharing an agent with the seller. I’ll work with my own buyer’s agent.”
Benefits of choosing an agent with low dual agency sales
A real estate agent’s percentage of dual agency transactions compared to their listings sold is a powerful signal when you’re choosing an agent.
Why?
Because it’s a data point that can reveal an agent’s character.
Real estate agents who avoid acting as a dual agent are much more likely to prioritize your best interests.
The opposite is more likely to be true if you work with an agent who has a history of representing both parties.
These agents are more likely to guide you in the wrong direction.
One example is being misled on price.
Agents who prioritize their commission are more likely to convince a buyer to offer a higher price so that they can move on to their next client.
Or they may persuade a homeowner to list their home at an unrealistic price to secure their business.
Either way, the client pays for it.
In my experience, agents with higher-than-average dual agency rates also tend to have more listings that sit longer and rack up price reductions.
How do I know?
Because this is one of the data points we analyze at SoldNest when we match sellers with a local listing agent.
An agent’s dual agency percentage is one of our screening requirements.
Experience, reviews, expertise, and contract flexibility all matter when you’re choosing a great agent.
But the most overlooked factor is an agent’s dual agency history.
The bottom line
Dual agency means one agent represents both the buyer and seller.
That setup creates a built-in incentive problem, and sellers usually take the bigger risk.
If you want to avoid it, set the boundary early and choose an agent who rarely works both sides.
That history matters more than most people realize.
