Limited Dual Agency, and Why Most Brokers Avoid It

In How Real Estate Compensation Works I mentioned limited dual agency twice and promised to come back to it. This is that article.

Limited dual agency is what happens when one broker represents both the buyer and the seller in the same transaction. It is legal in Washington, it has to be disclosed, and you have to consent to it in writing. What follows is what actually changes when you do.

One phrase disappears from the law

Washington sets out what a broker owes you in RCW 18.86. Put the three roles side by side and the whole story is in the first duty of each.

Under RCW 18.86.040, a seller's agent must be loyal to the seller by taking no action adverse or detrimental to the seller's interest.

Under RCW 18.86.050, a buyer's agent must be loyal to the buyer in exactly the same words.

Under RCW 18.86.060, a limited dual agent must take no action adverse or detrimental to either party's interest.

Read those again. The phrase "be loyal to" is simply gone from the third one. What replaces it is a promise not to harm either side. That is not nothing, and it is not the same thing as having someone in your corner.

The sentence the law makes you initial

Washington does not bury this. Under RCW 18.86.020, your services agreement has to say whether you consent to limited dual agency, and that consent must be separately initialed by you. Not signed along with everything else. Initialed on its own.

The same section requires your paperwork to carry an acknowledgment that a limited dual agent may not advocate terms favorable to one principal to the detriment of the other principal.

That is the honest summary of the whole arrangement, and the state put it in your own contract so you cannot say you were never told.

What you keep

Quite a lot, and none of it can be waived. Every broker owes these to every party under RCW 18.86.030, dual agent or not:

• Reasonable skill and care
• Dealing honestly and in good faith
• Presenting all written offers, notices and communications in a timely manner
• Disclosing material facts they know that are not apparent to you
• Accounting for all money and property received
• Giving you the state agency pamphlet and getting your acknowledgment of it
• Disclosing in writing, before you sign an offer, exactly who they represent

A limited dual agent also has to disclose conflicts of interest as they arise and advise you to get expert help on anything outside their expertise. Honesty, disclosure and care all survive. Advocacy is what does not.

Confidentiality cuts both ways

A limited dual agent may not disclose confidential information from or about either party, except under subpoena or court order, and that holds even after the relationship ends.

That protects you. It also protects the person across the table. The lowest number the seller would take and the highest the buyer would go are both sitting with the same broker, and neither of you is getting the other one.

The version most people never notice

You do not need one broker on both sides for this to come up. When two brokers at the same firm represent the two parties, RCW 18.86.060 makes the firm's designated broker, and any managing broker supervising both of them, a limited dual agent. Each broker still solely represents their own client.

This is the common one, and it is why your services agreement has a second, separate consent covering it. If your broker and the other broker share a sign, this is the paragraph that applies.

An unrepresented buyer is not dual agency

These get confused constantly, so it is worth being precise. If a buyer turns up with no broker at all, the listing broker still represents the seller and only the seller. There is no dual agency, because there is no second client. The buyer is owed the RCW 18.86.030 duties every party is owed, and nothing more.

I have been on the listing side of exactly that, and wrote about how it actually runs in Working With an Unrepresented Buyer. The workload changes enormously. The agency question does not.

What it looks like at the kitchen table

Here is the situation, and I will keep it hypothetical rather than pin it on anyone real.

Say I list five acres off Highway 9 for a seller who needs to be out by spring. Say I have also been driving a buyer around for four months, and that buyer walks the property and wants it. Everyone is pleased. Everyone assumes this is the easy version.

Then the inspection turns up a septic system at the end of its life, and out here that is never a small number. The buyer asks me how big a credit to ask for. The seller asks me whether to hold firm, because the next buyer might not care.

As a limited dual agent I cannot answer either question. Telling the buyer what to push for is advocating a term favorable to one principal to the detriment of the other, and so is telling the seller to refuse. What I can do is hand both of them the report, make sure every deadline is met, and tell each of them to get expert advice. That is the job description now.

Two clients who both needed an advocate at the same moment now share one person who is not allowed to be either of theirs.

Where it shows up in your paperwork

Two different forms, depending on which side of the table you are sitting on.

As a buyer, you sign the Buyer Broker Service Agreement, NWMLS Form 41. Limited dual agency compensation is Section 5B of it.

As a seller, you sign the Listing Agreement, NWMLS Form 1A. The same ground is Section 7B(i) there.

Both forms carry a line stating that compensation is fully negotiable and not set by law, and both carry a dual agency subsection, because the situation is common enough to need one. I walked through every one of those sections in How Real Estate Compensation Works.

So why do most brokers avoid it

Not because it is shady. Because it is hard to do well and easy to do badly, and because the moment a deal gets difficult is the exact moment both of your clients need advice you are no longer permitted to give.

The usual fix is simple. One side gets referred to another broker in the office, or to the managing broker, and both people get someone whose only job is their side of it. It costs the first broker half the transaction and it is almost always the right call.

My own preference is to hand one side off. Not because dual agency is wrong, but because I would rather be able to answer the septic question.

The bottom line

Limited dual agency is legal, disclosed and consented to in writing. What it removes is not honesty or care. It is the person who is supposed to be arguing for you.

Before you initial that box, ask the broker asking for it one question: when this deal gets hard, who is going to tell me what to do? If the answer is nobody, that is not a scandal. It is just the deal you are agreeing to, and you should agree to it on purpose.

General information about Washington real estate practice, not legal advice. The statute is RCW 18.86 and it is short enough to read yourself. For your own transaction, talk to your broker, your managing broker or an attorney.