In the context of real estate, a conflict of interest often arises in which type of agency?

A conflict of interest commonly arises in dual agency because this situation involves a real estate agent representing both the buyer and the seller in the same transaction. In this role, the agent holds a fiduciary responsibility to both parties, which can create significant ethical dilemmas. For example, the agent must navigate the interests of both the buyer and seller simultaneously, which can lead to conflicts over pricing, negotiation strategies, and disclosure of information.

The nature of dual agency means that the agent must balance the competing interests, making it challenging to provide full loyalty to either party. This can result in the agent being perceived as unable to act solely in the best interest of one side without compromising the other, hence creating a conflict of interest.

In contrast, buyer agency, seller agency, and single agency do not typically present the same level of conflict, as these types involve representing only one party's interests. Therefore, the potential for conflicting interests is significantly reduced, allowing for clearer and more straightforward fiduciary duties.