What is a potential conflict of interest when a real estate licensee also deals with mortgages?

When a real estate licensee is involved in both real estate transactions and mortgage activities, there is a potential conflict of interest due to the risk of dual agency. In a dual agency situation, the licensee represents both the buyer and the seller in the same transaction. This creates a conflict because the agent may have competing interests between both parties, especially if they are also handling the financing aspects of the transaction.

For example, the licensee might have a financial incentive to push the buyer towards a specific mortgage option that may not be in the buyer's best interest but benefits the licensee or their affiliated mortgage company. This dual representation can lead to situations where the licensee may not fully disclose pertinent information or may not represent both parties fairly, thereby compromising their fiduciary duties.

Understanding the implications of dual agency is crucial for both the licensee and the clients involved. It requires careful navigation of ethical responsibilities and transparency to ensure that both parties are treated fairly and that their best interests are prioritized throughout the transaction.