How is a dual agency created in a real estate transaction?

A dual agency in a real estate transaction is created when one agent represents both the buyer and the seller simultaneously. This situation often arises when a real estate broker has a listing agreement with the seller and also works with a buyer who is interested in that same property.

The agent must navigate the responsibilities and obligations to both parties, ensuring that confidentiality and fairness are maintained throughout the transaction. This can lead to complexities, as the agent may have to balance the conflicting interests of each party while adhering to fiduciary duties.

While mutual agreement of all parties can be an important factor in establishing a dual agency, it is the specific action of the agent representing both parties that formally creates the dual agency relationship. Other options, such as representing multiple buyers independently or using a third-party mediator, do not define a dual agency.