What does the term "dual agency" refer to?

The term "dual agency" specifically refers to a situation in real estate where a broker is legally allowed to represent both the buyer and the seller in the same transaction. This arrangement requires the broker to maintain neutrality and disclose their dual agency status to both parties involved, ensuring that both buyer and seller are aware of the potential conflicts of interest that may arise. In a dual agency scenario, the broker has a fiduciary duty to both parties, meaning they are obligated to act in the best interests of both the buyer and the seller while facilitating the transaction.

This definition distinguishes dual agency from other arrangements, such as having two different brokers working with the same buyer or a broker listing multiple properties for different sellers, both of which do not fit the key criteria of representing both sides in a single transaction. Understanding this concept is crucial for real estate professionals, as it has significant implications for negotiations, communications, and disclosures in transactions.