Why Dual Agency Is Illegal in Some States

Are you curious as to know why the dual agency is illegal in some states? Don’t worry; this article will provide all the information you need to know about dual agencies.

A buyer’s and seller’s agents are often present in most real estate transactions. However, there are certain instances where real estate agents work for two different agencies. In situations like this, the real estate agent can function as the buyer’s agent and the listing agent in the same real estate transaction.

Is working with a dual agent a wise decision? Let’s look more closely at the benefits and drawbacks.

Key Takeaway

  • What Is Dual Agency?
  • How Does Dual Agency Work?
  • The Drawbacks of Dual Agency
  • Is Dual Agency Illegal in Some States?
  • Why Dual Agency Is Illegal in Some State
  • Alternatives To Working with Dual Agents
Why Dual Agency Is Illegal in Some States

What Is Dual Agency?

In a real estate transaction, dual agency occurs when a single real-estate agent represents both the seller and the buyer. It can also happen when the same real estate company represents the buyer and seller or the landlord and tenant in a purchase and sale or rental transaction or when the same agent represents both sides.

A single agency occurs when the agent represents a single party. The opposite party is represented by a different agent working for a different firm. An agent with a single agency is free to act in their client’s best interests.

How Does Dual Agency Work?

In an ideal world, here’s how dual agency works. When a person hires a real estate agent, they have the option of working with a dual agent if they fully understand the trade-offs. Any client who agrees to a dual agency must sign an official disclosure from the state real estate department.

Regrettably, such disclosures are not required in all states at the start of an agent-client relationship. Even when they do, these forms aren’t always written in plain language, and they’re not always easy to understand or read.

What Are the Drawbacks of Dual Agency

There are some disadvantages to a dual agency arrangement that you should be aware of. These are some examples:

  • Conflicts of interest: Dual agents cannot advise either party they represent without creating a conflict of interest.
  • Increased workload for the agent means limited availability: Because dual agents handle twice as much work as an exclusive agent, buyers and sellers must compete for the agent’s attention
  • Misaligned interests between the buyer and agent: Because the sale price determines the agent commission, a dual agent could not be motivated to assist the buyer in negotiating a lower price.
  • Misaligned interests between sellers and the agent: Although both parties desire to obtain the greatest price, the agent could experience pressure to complete the transaction as soon as possible.

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Is Dual Agency Illegal In Some States?

Dual agency is prohibited in some states because agents cannot represent the interests of both sides of the transaction at the same time

List of States Where Dual Agency Is Illegal

a dual agency is illegal or heavily restricted in eight states, and these states include the following:

  • Alaska
  • Colorado
  • Florida
  • Kansas
  • Oklahoma
  • Texas
  • Vermont
  • Wyoming

You can learn more from the video below:

Why Dual Agency Is Illegal In Some State

This is primarily because real estate agents have a fiduciary duty to the clients they represent, which means they must always act in the best financial interests of these clients.

When agents represent both parties in a transaction, they cannot represent both parties’ best interests. The dual agency thus violates the real estate agent’s fiduciary duties. A buyer working with a dual agent may spend more money on a home because the real estate agent fought harder to get the seller a higher sales price. Alternatively, the seller may agree to a lower sales price because the agent worked harder to get a better deal for the buyer’s client.

Some real estate agents could aspire to secure a dual agency contract. This is so that they can earn the full real estate commission from the sale of a home. In the majority of house sales, the agents representing the sellers and the buyers divide the commission, which is typically 6% of the final sales price of the home. A commission of 3% of the final sales price of the home will go to the buyer’s agent, and the seller’s agent will get the remaining 3%.

However, in a dual agency situation, the agent representing both the buyers and the sellers is paid the full 6% commission. This can motivate the agent to advocate for the sellers more vehemently. Greater sales price ultimately results in a bigger commission.

Is dual agency legal in Texas?

Dual agency is not permitted by Texas law.

Is dual agency legal in New York?

Dual agency is allowed in New York State; however, there are some restrictions. The most notable requirement of New York State law is that agents representing the buyer and seller must acquire written authorization from both parties and advise them of their “agency connection and the rights and obligations it entails.”

Alternatives To Working with Dual Agents

Dual agency is not the only option available to buyers and sellers. Working with a buyer’s agent makes more sense if you’re a buyer. In a house transaction, these agents solely act on your behalf. When you buy a home, they will bargain for you to get the best price.

You, the buyer, won’t be responsible for this agent’s commission. Instead, the agent divides a commission with the seller’s agent once the real estate transaction is completed, deducting his or her fee from the sale’s earnings. Therefore, the buyer’s agent is essentially covered by the seller.

Work with a listing agent if you’re selling a house. This agent works to ensure that you sell your house for the highest price possible and exclusively represents you. This agent also referred to as a seller’s agent, will plan showings for prospective buyers, assist you in getting your home ready for sale, and list your house on the Multiple Listing Service. The money from the sale of your house will be used to pay for this agent.

Whether you are buying or selling, you should also confirm that your representative is a REALTOR. A REALTOR is required to abide by the policies and guidelines of the National Association of REALTORS.


A dual agency can make a transaction more convenient if you understand the risks and how it works. However, it is rarely advised. In practice, however, a dual-agency relationship can be difficult. Because the agent’s loyalty is divided between the buyer and the seller, it can be difficult for them to advocate for either. As a result, both parties may believe they are not receiving the best representation possible.

Hiring a real estate agent who only works in a “single-agency capacity” is the simplest way to avoid dual agency. If you’re a buyer, work with a buyer’s agent only, never a seller’s agent.





About Author

Why Dual Agency Is Illegal in Some States
Precious Ejimofor
My name is Precious Ejiofor, I am a professional self motivated, dependable writer and editor, with over 4 year of experience in writing for variety of business and platforms. I am able and capable to write on any kind of topic.
Specifically, I focus on producing persuasive and compelling contents that is thoughtful, prominent, and engaging.

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