What is "dual agency"?

The concept of dual agency refers to a situation in real estate transactions where a single broker or agent is representing both the buyer and the seller simultaneously. This creates a unique dynamic, as the agent must navigate the interests of both parties, which can often be conflicting. In dual agency, the broker acts in a fiduciary capacity to both clients, meaning they are required to act in the best interests of both the buyer and the seller.

This arrangement can lead to complexities, as the agent must ensure that they are not favoring one party over the other and must maintain transparency throughout the transaction. Because of the potential for conflict of interest, many states, including New Mexico, have specific laws and disclosure requirements regarding dual agency, ensuring that all parties are aware of the situation and agree to it.

In contrast, the other options describe different scenarios in real estate practice that do not align with the definition of dual agency. Therefore, understanding the nuances of dual agency is critical for anyone involved in real estate, as it affects how transactions are conducted and the responsibilities of the broker.