What occurs when a broker represents both a seller and a buyer in a single real estate transaction?

When a broker represents both a seller and a buyer in a single real estate transaction, this situation is known as dual agency. In dual agency, the broker acts on behalf of both parties in the transaction, which is unique because it creates a relationship where the broker must navigate the interests of two clients who may have conflicting goals—one wanting to get the best price for their property and the other wanting to purchase at the lowest price possible.

The key aspect of dual agency is the broker's obligation to maintain fairness and loyalty to both parties, and this often requires careful disclosure of all information that could affect the transaction, with the informed consent of both the buyer and seller. This practice is regulated in many jurisdictions, often necessitating a clear agreement between the broker and both clients to explicitly acknowledge that a dual agency relationship exists.

In contrast, the other options refer to different types of agency relationships or agency concepts that do not fit the situation described. For example, exclusive agency typically refers to an arrangement where a seller grants one broker the exclusive right to sell their property without obligating them to pay a commission if the seller finds a buyer independently. Co-agency involves multiple agents working together to represent a client, which can differ from the singular representation in dual agency.