A conflict of interest arises when an agent's loyalty is compromised by which action?

A conflict of interest arises when an agent accepts dual representation because this situation can compromise the agent's ability to provide undivided loyalty to each party involved in a transaction. In real estate, dual representation, or dual agency, occurs when a single agent represents both the buyer and the seller in the same transaction. This creates a scenario where the agent may struggle to advocate fully for each party since the interests of buyers and sellers can easily conflict. As a result, the agent may inadvertently favor one party over the other, leading to questions about the fairness and transparency of the transaction.

Understanding the ramifications of dual representation is essential for agents, as it requires full disclosure and informed consent from all parties involved to mitigate the potential conflict. Agents must be diligent in their duties to provide equal levels of service, but the inherent nature of representing conflicting interests can make it difficult to uphold loyalty to both clients.