In the case of dual agency, what is a potential conflict of interest?

In the context of dual agency, withholding information from either party is a significant potential conflict of interest. Dual agency occurs when a single agent represents both the buyer and the seller in a transaction. This scenario inherently poses challenges regarding the agent's ability to maintain a fair and impartial position for both parties.

When an agent is bound to confidentiality and fiduciary duties to both the buyer and seller, they may face the dilemma of needing to withhold certain information from one party to avoid unduly influencing the negotiations or harming the interests of the other party. This can lead to a situation where the agent might unintentionally or intentionally withhold critical information, such as the seller's willingness to accept a lower offer or the buyer's upper price limit.

The fiduciary responsibility of the agent demands full disclosure and transparency; however, in dual agency, the agent must balance the interests of both parties. This tension creates a significant conflict of interest, as the agent cannot be fully transparent with both sides without risking the interests of one party over the other. Therefore, the act of withholding information can jeopardize the trust and loyalty necessary in an agency relationship, making it a crucial consideration in dual agency situations.