When Your Real Estate Agent Works for the Other Side: Spotting Undisclosed Dual Agency and Hidden Incentives

You trust your real estate agent to look out for your interests. Whether you are buying a home or selling one, you believe they are on your team. That assumption can cost you thousands of dollars. One of the most common forms of broker misconduct goes undetected because it happens behind the scenes: undisclosed dual agency and hidden commissions. This is not a technicality. It is a violation of fiduciary duty, and it is more widespread than most homeowners realize.

Dual agency occurs when the same agent or brokerage represents both the buyer and the seller in a single transaction. In many states, it is legal only if both parties give informed written consent. The problem is that many agents never disclose this arrangement clearly, or they bury the disclosure in a stack of papers you sign without reading. When an agent is working for both sides, they cannot faithfully advocate for either. They cannot push for a higher price on your behalf while also trying to get the buyer a lower price. Instead, their incentive shifts to just closing the deal. The faster it closes, the faster they collect the full commission from both sides. That commission is often double what they would earn from representing one party alone.

A variation of this is the hidden referral fee or kickback. Your agent might steer you toward a particular mortgage lender, title company, home inspector, or contractor in exchange for a fee. These payments are supposed to be disclosed under the Real Estate Settlement Procedures Act, but they often are not. You might think your agent is recommending a lender because they are reliable. In reality, the agent is receiving a cut of the loan origination fee or a flat payment for the referral. This inflates your closing costs and reduces the quality of service you receive, because the referral is based on the agent’s profit, not your best interest.

How can you spot these practices before you get stuck? Start by reading every document the agent asks you to sign, especially the representation agreement and any disclosure forms. Look for language that says the agency relationship may change if the agent introduces a buyer or seller who is also represented by the same firm. Some forms use terms like “transaction broker” or “limited agent.“ That is often a signal that the agent is not working solely for you. Ask directly: “Will you or anyone in your office represent the other party in this transaction?“ If the answer is anything other than a clear no, get it in writing that you are the only client.

When it comes to recommended service providers, be skeptical. Ask the agent if they receive any compensation from the companies they suggest. You have a legal right to that information. If the agent hesitates or says they get a “thank you” or a “small gift,“ push harder. Small gifts can turn into thousands of dollars in hidden fees. Compare the agent’s recommended lender against two or three others on your own. Check the same for title companies and inspectors. If the pricing differs dramatically, you now know why.

Another red flag is the agent who pressures you to accept an offer quickly or to avoid certain contingencies. This is typical in dual agency scenarios. The agent knows that a deal with fewer contingencies is easier to close, even if it leaves you exposed. A seller might be urged to accept a lower price because the buyer’s agent is also from their firm. A buyer might be told the house is “perfect” when it has glaring defects that a single-minded agent would have flagged. Trust your gut. If an agent seems too eager to push you toward a conclusion, step back.

If you suspect misconduct, document everything. Save emails, texts, and voicemails. Take notes on conversations. Then contact your state’s real estate commission or licensing board. These agencies investigate complaints and can revoke or suspend licenses. You may also have legal recourse for damages, especially if the undisclosed dual agency caused you to pay more or sell for less than fair market value. A real estate attorney can evaluate your situation, and many offer free initial consultations.

You do not have to be a victim of bad agents. The real estate industry is built on relationships, but those relationships must be transparent. The moment an agent hides their loyalties or takes a secret fee, they are no longer serving you. They are serving themselves. Protect your biggest investment by staying informed and asking the hard questions. Your home and your savings depend on it.