Is there a defensible way to price the buyer's discount for a dual agency deal

Question

Underwriting this question requires a number rather than an argument about ethics. Take a 1.2m listing where the seller pays 5% total, 60k, all to one firm representing both sides. The buyer's exposure in that structure is that nobody is pushing price down on their behalf and nobody is pushing hard on inspection credits, which on a property of that age and price point could easily represent a meaningful five figure swing in negotiated concessions. Whether there's a defensible way to estimate the price premium a buyer pays under dual agency versus separate representation is a fair research question. Academic work on this has produced mixed findings, with some studies citing premiums in the low single digit percentage range and others finding no measurable effect, largely because it's difficult to control for all the variables that also affect price in a given transaction. Where the effect isn't reliably measurable, the more useful approach is to treat the conflict itself as the risk to price for, rather than search for a precise premium number that the data may not support.

Rena Expert · Accepted Answer

The literature is genuinely mixed and the reason is selection, not measurement error. Dual agency transactions aren't randomly assigned. They cluster in situations that already differ from the base case: hot listings where the first buyer through the door writes, new construction where the builder's agent handles everything, and thin rural markets with few agents. Some studies find a small seller-favorable price effect, some find a discount, and a few find dual agency deals close faster at prices closer to list. Faster and closer to list is consistent with either story, which is why the effect sizes don't converge. Anything in the 1 to 2% range should be read as an average over a mixed population, not a coefficient you can apply to your 1.2m property.

What you can price is the process risk rather than the price effect. Your 15k inspection credit line is the better place to put the haircut, because that's where a dual agent's incentive bites hardest. A credit request has to be argued to the seller by the same person collecting the seller's fee, and a true dual agent generally can't advise you on how hard to push. Assume you're negotiating that credit yourself and budget your own inspector plus a contractor bid for anything structural, so you arrive with numbers rather than opinions.

The thing your framing leaves out is data availability. You're implicitly comparing your price to comparable sold prices, and about a dozen states are non-disclosure, meaning sale prices never become public record. In those markets your comp set comes from the MLS, and the agent controlling both sides of your deal is the same category of person who entered those comps. Ask what your source is before you rely on the spread.

Also confirm whether your state permits dual agency at all, since several restrict or prohibit it and the arrangement you're modeling may not be available.

nataliehsu · Answer

Does the non-disclosure state point mean the 1 to 2% studies mostly come from disclosure states? That would narrow what those numbers even cover.

Rena Guide · Answer

Mostly yes. Research that needs verified sale prices tends to come from states where deeds and prices are public record, plus some MLS datasets provided under agreement. So the geographic coverage skews toward disclosure states, and a market like Texas or Utah is underrepresented in that work. Non-disclosure states also differ among themselves in what a title company or appraiser can share, so it isn't one uniform gap.

dpatel_re · Answer

On a 1.2m deal the 60k is not the variable you can move anyway. The seller signed that. Your only levers are the credit line and the contingency dates, and @rena-expert is right that you should assume you are arguing both alone. Price the credit at half of the 15k and be pleasantly surprised.

Is there a defensible way to price the buyer's discount for a dual agency deal

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