In some states dual agency isn’t allowed. It is allowed in Minnesota as long as both parties are informed and they give their consent. Dual agency happens when the same agent represents the buyer and the seller in the same transaction. It also happens when both buyer and seller are represented by the same broker.
In Minnesota we have a law that says as a real estate license I have to explain dual agency and give potential clients a Minnesota disclosure document called “Agency Relationships in Real Estate Transactions” here is a copy: agency disclosure .
Yet agency is misunderstood. If you list your house with a real estate agent and that agent brings in an offer from a buyer that she is representing you now have dual agency which means that agent can not represent the buyer or the seller but instead becomes a facilitator. The agent facilitates the sale and can not do anything to the advantage of one party and the detriment of another.
What most home sellers and buyers do not understand is the way the word broker is used in the disclosure. If an agent from real estate company A lists a home and another agent from real estate company A brings in the buyer there is dual agency because they have the same broker. All agents work under a broker and most people have no idea what a broker does or who that person is.
There are a couple of large real estate companies in the area that have one broker for a few thousand agents. When they list your home they will tell you all about the networking and how they will market your home to other agents. What they don’t tell you is that if one of those agents brings in a buyer those agents go from being able to advocate for their clients to being facilitators.
The rules are broken often as agents from two offices of the same real estate company under the same broker both advocate for their clients.
Home buyers need to be aware when they go into an open house or new construction the nice agent who is showing them around is representing the seller and anything they say can be to their detriment later on. Buyers should choose an agent to work with who will work for them as an advocate and not just a facilitator.
Many consider dual agency to be unethical and in some states it is not allowed.