What does "dual agency" refer to in real estate?

Dual agency in real estate specifically refers to a situation where a single agent, or a brokerage representing that agent, has the responsibility of representing both the buyer and the seller in the same transaction. This arrangement can create unique challenges and considerations, particularly regarding the agent's ability to maintain impartiality and provide fair representation to both parties, as they must navigate potential conflicts of interest.

In many states, including Alabama, dual agency requires full disclosure to both parties about the situation, and in some cases, it may necessitate written consent from both the buyer and seller to proceed under this arrangement. The importance of understanding dual agency lies in its implications for negotiation, information sharing, and the fiduciary duties the agent owes to both clients.

This concept does not relate to having multiple agents for different parties, forming partnerships between agencies, or being restricted to commercial properties, which are all incorrectly suggested by the other options. Each of those scenarios outlines different aspects of agency relationships in real estate that do not capture the essence of what dual agency truly encompasses.