During a real estate transaction in Hawaii, you may be asked to sign a Dual Agency Consent form. If you're not sure what dual agency means or whether it's in your best interest, you're not alone. Here's what you need to know so you can make an informed decision.

What Is Dual Agency?

Dual agency occurs when the same real estate brokerage firm represents both the buyer and the seller in the same transaction. This can happen when two agents from the same brokerage are working with opposite sides of a deal, or when a single agent is working with both the buyer and the seller directly.

In a standard transaction, the buyer's agent advocates for the buyer's best interests, while the listing agent advocates for the seller. In a dual agency situation, the brokerage firm owes fiduciary duties to both parties, which changes the dynamic significantly.

How Dual Agency Works in Hawaii

Hawaii has specific rules governing dual agency under Hawaii Administrative Rules §16-99-3.1 (Disclosure of Agency). Here are the key requirements:

• Written disclosure is required: The brokerage must provide both oral and written disclosure of the dual agency relationship
• Written consent from all parties: Both the buyer and the seller must consent in writing before entering into a purchase contract
• Neutrality is mandatory: The dual agent must remain neutral in all negotiations and cannot advance one party's interest over the other
• No price advice: The agent cannot suggest what price to offer or accept
• Confidentiality limits: The agent cannot share confidential information from one party with the other

In practice, when a brokerage acts as a dual agent, the agents shift from being advocates and consultants to being impartial facilitators of the transaction.

When Does Dual Agency Typically Come Up?

Dual agency most commonly arises in these situations:

• A buyer contacts the listing agent directly about a property that agent has listed
• Two agents within the same brokerage firm are representing opposite sides of a deal
• A buyer who is already working with an agent at a brokerage finds a home listed by the same brokerage

It can also come up when a brokerage represents multiple buyers competing for the same property (buyer-buyer dual agency) or multiple sellers in similar markets (seller-seller dual agency). Hawaii law requires disclosure in all of these scenarios.

Potential Advantages of Dual Agency

• Streamlined communication: With one brokerage handling both sides, communication between parties can be more direct and faster
• Faster transaction: Scheduling inspections, coordinating paperwork, and managing deadlines can sometimes move more quickly
• Potential commission savings: In some cases, the dual agent or brokerage may negotiate a reduced commission since they're earning from both sides
• Deeper knowledge of the deal: The agent may have a more comprehensive understanding of both sides' motivations and constraints

Risks and Drawbacks of Dual Agency

• No dedicated advocate: Neither the buyer nor the seller has an agent exclusively fighting for their best interests. The agent becomes a neutral facilitator
• Limited negotiation guidance: The dual agent cannot advise you on what price to offer or accept, or share strategic insights that could strengthen your position
• Potential conflict of interest: Even with the best intentions, balancing the needs of two parties with competing financial interests is inherently difficult
• Confidentiality concerns: Information you share with your agent may not be protected in the same way as in a single-agency relationship
• Research suggests lower sale prices: Some studies indicate that dual agency transactions can result in slightly lower sale prices for sellers, as agents may prioritize closing speed over maximizing value

Should You Agree to Dual Agency?

There's no one-size-fits-all answer. Here are some questions to consider:

For Buyers

• Are you comfortable negotiating without strategic pricing advice from your agent?
• Do you have enough market knowledge to evaluate whether you're getting a fair deal?
• Is there a compelling reason to work with this particular brokerage for this property?
• Would you prefer to have your own independent agent who is solely focused on your interests?

For Sellers

• Are you confident in your home's pricing without exclusive strategic advice from your agent?
• Do you believe the potential for a faster closing outweighs having a dedicated advocate?
• Are you comfortable with your agent not being able to share negotiation insights that could benefit you?

Your Right to Decline

It's important to know that you are not required to agree to dual agency. If you're uncomfortable with the arrangement, you have every right to decline. You can request to work with a different agent at a different brokerage who will represent your interests exclusively.

If you're presented with a Dual Agency Consent form, take the time to read it carefully. Ask questions. Understand exactly what the brokerage can and cannot do for you under this arrangement before you sign.

Our Approach to Agency

We believe in transparency and making sure our clients fully understand the agency relationship before any transaction begins. Whether you're buying or selling on Oahu, we'll walk you through the agency disclosure process and make sure you're comfortable with how you're being represented every step of the way.

Contact Kristy & Austin Nakamura if you have questions about dual agency, buyer representation, or anything else related to buying or selling a home in Hawaii. We're here to make sure your interests are protected.