What Is Dual Agency in New York Real Estate and Should Sellers Avoid It?

Dual agency is a topic that comes up in real estate conversations with surprising frequency – and one that sellers often don't fully understand until they're in the middle of a situation it creates. Here's a clear explanation of what it is, how it happens, and what the implications are for sellers who encounter it.

What Dual Agency Is

Dual agency occurs when a single real estate agent (or a single brokerage) represents both the buyer and the seller in the same transaction. Instead of having an agent advocating exclusively for your interests as a seller and a separate agent advocating exclusively for the buyer's interests, both parties are represented by the same professional.

In New York, dual agency is legal but requires the informed written consent of both parties. The disclosure must explain the limitations of the dual agent's ability to fully represent either party's interests.

How Dual Agency Happens in Practice

Dual agency most commonly occurs in one of two ways:

Direct dual agency: Your listing agent meets a buyer who wants to purchase your home. Rather than directing the buyer to work with a different agent, your agent agrees to represent the buyer as well. Now the same agent who owes you the duty of confidentiality about your bottom line also represents the buyer who wants to find your bottom line.

Designated agency (a variation): At larger brokerages, the listing agent and a buyer's agent work for the same brokerage but are designated as separate agents representing each side. New York allows this form of representation with appropriate disclosure, and it is somewhat less conflicted than true dual agency – though the same brokerage's institutional interests may still create alignment issues.

Why Dual Agency Creates Real Conflicts

An agent representing only the seller has specific duties: to achieve the highest possible price with the best possible terms, to keep the seller's financial position and motivation confidential, to advise the seller on how to respond to offers and negotiate effectively.

An agent representing only the buyer has the opposite duties: to help the buyer pay the lowest possible price, to keep the buyer's financial position and motivation confidential, and to advise the buyer on how to structure the most favorable offer.

An agent representing both parties cannot fully perform either set of duties. They cannot advise the seller on how to respond to the buyer's offer without compromising their duty to the buyer. They cannot advise the buyer on what the seller might accept without compromising their duty to the seller. They are legally constrained to a neutral role that serves neither party's interests fully.

The Financial Reality of Dual Agency for Sellers

Dual agency is financially attractive for the agent: they earn both sides of the commission rather than having one side go to a cooperating buyer's agent. This creates a financial incentive for the agent to facilitate dual agency situations.

For the seller, the financial reality is less clearly positive. Studies on dual agency outcomes have found mixed results, but the logical concern is valid: a seller whose agent is also representing the buyer has a reduced advocate in the negotiation. The confidential information the agent holds about both parties' positions – information they're legally constrained from sharing with either – creates an asymmetry that may not serve the seller's interests.

Should You Agree to Dual Agency?

The decision depends on specific circumstances. If the dual agency situation arises with a buyer who is strongly motivated and capable of paying your asking price or above, the risk may be modest. If the situation involves a buyer who is already negotiating hard and whose agent (your agent) is constrained from fully advocating for you, the risk is more significant.

The alternative to dual agency in this situation is to ask the buyer to work with a separate agent. Many sellers do exactly this – their listing agreement explicitly states that the agent will refer any unrepresented buyers who approach them to cooperating agents rather than accepting dual agency.

I discuss dual agency explicitly with every seller I represent and give a clear recommendation about whether and how to handle it in their specific situation. Transparent representation starts before the listing agreement is signed. Call me at (321) 447-4259 or visit movewithricky.com.

Rakesh (Ricky) Khanna | Licensed Real Estate Salesperson
Better Homes and Gardens Real Estate Realty Connect
Call or text: (321) 447-4259 | movewithricky.com