What signifies a dual agency situation in a real estate transaction?

A dual agency situation in a real estate transaction arises when a single agent represents both the buyer and the seller. This scenario can lead to potential conflicts of interest since the agent must balance the interests of both parties. In essence, the agent becomes a neutral facilitator in the transaction, which necessitates thorough disclosure and often requires the consent of both parties involved. This arrangement is particularly significant because it affects how information is shared and what fiduciary duties the agent must uphold toward each client.

The other options depict different agency relationships where only one party is represented, or, in the case of an agent representing neither party, there is no agency relationship established. Such situations do not involve the complexity and potential conflicts inherent in dual agency, thus distinguishing them from the correct identification of dual agency.