When you sign a listing agreement with a real estate brokerage you agree to a negotiated commission rate, payable to each agent involved in your sale. Your contractual commitment is with the brokerage, not the agent. When an agent represents you as a seller, she is paid by the brokerage from the commission you’ve agreed upon. If your buyer is also represented by the same agent in what is termed “double dipping,” you can request that the brokerage reduce its commission.
When a real estate agent represents both the buyer and seller, it’s known as dual agency. Some states restrict dual agency, because the practice may violate certain terms of the relationship expected between clients and agents. To get around this, the states that allow dual agency require both the seller and the buyer to acknowledge that they agree to give up their rights to exclusivity when the same agent handles both sides of the transaction.
Same Brokerage, Different Agents
When your agent brings you a buyer who she also represents, you can request from your agent’s broker that the buyer be represented by a different agent than the one you’ve hired. This arrangement still falls under the dual agency definition, but serves to protect your interests further. However, it doesn’t free you from paying the full commission that you’ve agreed upon since both agents are giving their full attention to each client in moving the deal forward.
If you agree to the same agent handling both sides of your transaction, you can renegotiate the commission. When you sign your listing agreement, you may add terminology to this effect, stating in advance the reduced commission in the case of both the seller and buyer being represented by the same agent.
The market dictates agent commissions. When inventory is low and agents are scrambling for listings, offering a lower rate just to get the listing is common. Often, an agent will accept a split that’s lower than she gives the buyer’s agent to make your property attractive in the marketplace. Agents also work on different commission splits, meaning the percentage from the total commission they receive. These components reflect the position of the agent when negotiating commissions. Be aware of your market before asking your agent for a reduced commission; however, renegotiate the commission from strength when agreeing to a single agent representing both sides of your deal.
- The New York Times: The Buddy System, or the Buyer’s Broker
- The Wall Street Journal: Negotiating Real Estate Agent’s Commission
- RubyHome. "How Do Realtors Get Paid? What Every Buyer and Seller Should Know." Accessed April 22, 2020.
- HomeLight. "Real Estate Agent Commissions 101: A Breakdown for First-Time Sellers." Accessed April 22, 2020.
- CRES Insurance. "Employees vs Independent Contractors — What Real Estate Brokers Need to Know." Accessed April 22, 2020.
- Real Estate Express. "How Do Real Estate Agents Get Paid?" Accessed April 22, 2020.
- Redfin. "How Real Estate Commission Works." Accessed April 22, 2020.
- Century 21 New Millennium. "How Real Estate Commission Fees Work." Accessed April 22, 2020.
- National Association of REALTORS®. "Dual Agency Doesn’t Benefit Consumers." Accessed April 22, 2020.
Jann Seal is published in magazines throughout the country and is noted for her design and decor articles and celebrity *in-home* interviews. An English degree from the University of Maryland and extensive travels and relocations to other countries have added to her decorating insight.