What is dual agency in real estate?

What is dual agency in real estate?

Before going into dual agency, it is necessary to understand the agency relationship between a Realtor and a client or customer. Believe it or not, there is a very big difference between the two. I have to start off by saying that this article applies specifically to Indiana (and the Metropolitan Indianapolis Board of Realtors [MIBOR] specifically), and its rules regarding agency. States have varying definitions.

From there we ask the question, are you a client of the Realtor or a customer?

For home sellers, it’s easy. You are under contract with the Realtor…so you are a client. This means you have a full agency relationship with your Realtor and they are obligated to represent your interests first and foremost.

With home buyers, it gets a little more complicated. So lets look at the two most common ways this breaks down.

Option 1. You called the agent whose name was on the sign of a house you want to see. He shows it to you. It is important to understand that you are a customer to this agent and he represents the interests of the seller. That’s right, he is obligated to protect the sellers interests rather than yours. He is obligated to deal with you fairly and honestly, but that is it. If you don’t ask, he doesn’t have to tell and he likely won’t…heck if it might prevent you from buying he can’t…unless you ask directly. He is legally bound to protect the sellers interests first.

Option 2. You went out and found an agent, interviewed them and then signed a buyers agreement for that agent to work with you to help you find and buy a home. You have an agency relationship with this real estate agent and he is obligated to look out for your interests first and foremost.

So how does dual agency come into play?

Well, imagine if you hired the agent, like in option 2. so you have an agency relationship. While looking at houses he shows you a home that he has listed for sale. Wait, what? That’s right, one of the houses he shows you is his own listing…meaning he has an agency relationship with the seller. Now imagine you want to make an offer on that house. Whose interest is the agent obligated to protect?

Being that you hired him, you probably believe that he has to protect your interests first, and of course the seller thinks the same.

The truth of the matter is that the Realtor is in the difficult spot of having to represent both sides of the deal equally. The way that is accomplished is the reason that dual agency is sometimes called limited agency.

Rather than doing what a Realtor would do when they are a clear advocate for one side over the other, a real estate agent involved in a home purchase that involves dual agency must take a step back. They will no longer try to find leverage to negotiate with, they cannot advise you on the deal other than answering questions you ask them directly and they cannot take one side or the other. The agent just reduces their participation to handling the paper work, answering questions and communicating between the parties.

Is this situation ideal? I don’t think that it would be my preferred method of buying a home…or selling one for that matter; but given the high level of ethics that Realtors uphold, it shouldn’t cause any problems for a savvy buyer who will do a little research and just needs the help of a real estate agent to get through the process.

What option do you have if you signed a buyers agreement with the listing agent of a home you have decided to buy?

There are two readily available. You can decide to trust the agent to take care of both sides of the deal…based on our ethics and your knowledge of the agent.


You can ask the agent to refer you to another buyers agent to eliminate the dual agency so that you can be fully advised of your options throughout the deal. Most if not all agents will have no problem doing this.

So that’s dual (or limited) agency in a nutshell.

If you want to work with the kind of Realtor that will help you understand the whole process, and not leave you wondering what to do…call Robb at 317-657-8059 or email robb@yourrealtylink.com to set up your buyers consultation or listing appointment.

If you are thinking about selling your home, or if you would just like to know what your home may bring on the open market; fill out the form below and request a CMA on your home.
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About Robb

A husband, Dad to 5, and Grandpa to 9. US Navy Vet. 18 Year Postal Employee turned full time Realtor. I enjoy a wide variety of things, but you will find that here I mostly write about Indianapolis, government/politics, recent news, and whatever book I am reading or have just finished at the moment.
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