The property market is built on the fundamental relationship between buyers and sellers, each with their own expectations. Buyers who enlist a property agent expect guidance and advocacy in securing the best possible deal. Sellers, too, trust their agents to act in their best interest.
But when an agent represents both parties in a single transaction, a glaring question arises: where does their true loyalty lie?
In Malta, dual agency – where one agent represents both the buyer and the seller – is the widely accepted norm. A buyer contacts an agent, who organizes a viewing and negotiates on behalf of the seller.
This system is so ingrained that few question its inherent conflict of interest. Yet, in many countries, dual agency is restricted or banned due to concerns over fairness, transparency, and ethical practice. At its core, the question arises: can an agent serve two opposing interests?
Consider a negotiation where the seller wants to maximize profit while the buyer seeks the lowest price. How can one agent truly advocate for both? More critically, how can buyers and sellers be sure that the agent’s advice is unbiased when their commission is tied to the final sale price? Dual agency forces neutrality, often making agents ineffective advocates at critical moments in the transaction.
Proponents argue that as long as both parties provide informed consent, dual agency remains ethical. However, this assumes that clients fully understand the implications.
Real estate transactions involve significant legal and financial stakes, and buyers and sellers rely on agents for guidance. Yet, dual agency compromises the very trust placed in their representation. Informed consent should be more than a legal formality—it should be a transparent discussion about the limitations of such an arrangement.
The financial incentives for agents in dual agency are undeniable. Representing both sides means receiving the full commission rather than splitting it with another agent. This creates a conflict where the agent’s priority shifts from securing the best outcome for either party to simply closing the deal.
For buyers and sellers, the benefits are far less clear. While fewer intermediaries may seem efficient, this often comes at the cost of diminished representation, leaving less-informed clients at a serious disadvantage.
The real question is: does dual agency truly serve buyers and sellers, or does it primarily benefit agents?
Many jurisdictions have already banned the practice or imposed stricter disclosure requirements to protect consumers from divided loyalties. A more balanced approach could be that of a designated agency, where different agents within the same brokerage represent each party. This preserves the convenience of working within a single firm while ensuring full representation for both sides.
The real estate industry needs to show that it prioritizes fairness and transparency if it wants to boost consumer confidence.
Buyers and sellers deserve representation without doubts about their agent’s true allegiance. Perhaps it is time for Malta to rethink dual agency where conflicts of interest are eliminated so that every buyer and seller can trust that their agent is working solely in their interest.
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