What is dual agency in real estate transactions?

Dual agency occurs when a real estate agent represents both the buyer and the seller in the same transaction, provided that both parties give informed consent to this arrangement. This concept is significant because it impacts how agents negotiate and represent the interests of both parties involved in a sale.

In a dual agency situation, the agent must navigate the complexities of representing two clients whose interests may not always align. Therefore, the agent must be transparent about their role and ensure that both the buyer and seller understand the potential implications of this dual representation. Informed consent is crucial, as it allows both parties to agree to the arrangement with a full understanding of how it may affect the outcome of the transaction.

The other choices reflect different situations in real estate practices but do not define dual agency. For example, representing only the buyer or exclusively the seller addresses single agency relationships and does not encompass the dual representation dynamic. A legal agreement between agents or co-managing a sale falls into collaborative practices but lacks the inherent complexities and requirements specific to dual agency.