What type of agency relationship exists when a real estate agent represents both the buyer and the seller?

The agency relationship that is formed when a real estate agent represents both the buyer and the seller is known as dual agency. This situation arises when the same agent, or potentially the same brokerage, has the responsibility to represent both parties in the transaction. In dual agency, the agent must maintain neutrality and cannot favor one party over the other, which can create unique challenges and requires careful navigation to ensure that both the buyer's and seller's interests are adequately addressed.

This arrangement is significant because it may present potential conflicts of interest; hence, many states, including Virginia, require disclosure of dual agency to both parties and often require their consent to proceed. Understanding dual agency is crucial for real estate professionals as it shapes how they manage relationships and negotiations in real estate transactions.

The other types of agency relationships listed in the options do not accurately describe this scenario. Exclusive agency typically refers to a listing agreement where one agent has the exclusive right to represent the seller, but not encompassing the buyer in the same transaction. Open agency usually involves multiple agents being able to represent a seller, allowing them to offer the listing to anyone they choose and is not confined to dual representation. Designated agency involves assigning different agents within the same brokerage to represent the buyer and seller separately, avoiding