My wife and I were recently shown a home by the seller’s agent. When he learned we were not represented by our own agent, he suggested we allow him to be our agent as well. We have concerns about being represented by the seller’s agent as there could be a conflict of interest. Is it legal in Arizona for a real estate agent to represent both a seller and the buyer? If it is legal, what benefits or concerns are there with this type of arrangement?
In Arizona, a real estate agent has a fiduciary duty to their clients. A fiduciary relationship is significant in the law and requires the highest level of care and conduct toward those being represented. Reduced to its essence, a fiduciary duty encompasses the duties of confidentiality, loyalty, accountability, competence, obedience and advocacy.
When an agent represents both a seller and a buyer in a single transaction this is referred to as dual agency. Dual agency is legal in Arizona with certain significant restrictions. Arizona law requires that an agent may not accept compensation from both parties to a transaction without written consent from each. Dual agency must be disclosed in writing or it is not permitted. Most agents use agency disclosure and election forms which help to explain some of the issues involved.
There are economic advantages to dual agency, both for the agent involved as well as the buyer or seller. However, there are significant concerns. By consenting to dual agency, you agreeing that some of the fiduciary duties owed by your agent will not be possible. For instance, it is impossible for a dual agent to be an advocate for both the seller and the buyer. Careful consideration should be given when determining whether to enter into a dual agency relationship.