Does going dual agent actually save anybody money or is that a myth

Question

Trying to work out which side of this business fits me and I keep hitting the commission math. The pitch I hear from sellers is that if the listing agent finds the buyer, everyone saves, because there's one agent instead of two so the total should drop. Then I look at actual listing agreements and the number doesn't drop at all, the one agent just keeps the whole thing.

So is the savings real anywhere, or is it a story people tell each other?

Rena Guide · Accepted Answer

The saving only exists if somebody negotiates it into the contract before the fact. Nothing in dual agency reduces the fee on its own.

Here's the mechanism. A listing agreement sets the total the seller pays their brokerage, say 5% on a 400k sale, which is 20k. Historically part of that got shared with whoever brought the buyer. If the listing agent brings the buyer themselves, the sharing step doesn't happen and the full 20k stays with one brokerage. The seller's obligation didn't change. That's why the number you see doesn't drop.

Some listing agreements do include a reduced rate for the case where the brokerage represents both sides, sometimes written as 5% normally and 4% if the firm procures the buyer. It has to be in the agreement in writing at signing. Asking for it afterward, once a buyer is standing there, is a much weaker position.

Since the NAR settlement, buyers sign their own written agreement with their agent stating that agent's compensation, and seller-paid buyer-side compensation is negotiated separately rather than assumed. So the two sides of the fee are more visible than they used to be, and a dual agency situation now has a paper trail showing exactly who's collecting what. Confirm the current forms and practice with the brokerage, because implementation differs by state and by firm.

One thing to hold onto as you figure out where you fit. The commission question and the representation question are separate. A discount on the fee doesn't buy back the advocate you gave up.

gregpowell66 · Answer

Coming from building, this is like hiring the general contractor to also be your inspector and being told you saved an inspection fee. You did save it. You also no longer have an inspection.

ryanmck27 · Answer

My license course covered the reduced-rate clause and the instructor said almost nobody writes it in, mostly because the listing agent is the one drafting the agreement and has no reason to offer it. Sellers can ask for it, they just don't know it exists.

derekj19 · Answer

@halyard that's the part I find interesting on the service side. The whole savings story survives because the person who'd have to give it up is also the person explaining the paperwork.

Does going dual agent actually save anybody money or is that a myth

4 replies