In a dual agency transaction, the seller pays the real estate commission out of the proceeds at closing, the same way they would in a sale with two separate agents. What changes is where the money lands: instead of being split between a listing brokerage and a buyer’s brokerage, the full commission stays with the single firm representing both sides. Since the National Association of Realtors (NAR) settlement took effect in August 2024, buyers can also end up owing part of their agent’s fee if the seller’s payment does not cover what the buyer agreed to in writing, and that wrinkle matters in dual agency more than anywhere else.
How the Money Actually Moves
A seller signs a listing agreement that sets a total commission, historically averaging around 5 to 6 percent of the sale price, though rates vary and have trended slightly lower in recent years.1Board of Governors of the Federal Reserve System. Commissions and Omissions: Trends in Real Estate Broker Compensation That amount comes out of the seller’s proceeds at closing. The buyer does not write a separate check for it; the money is built into the price the seller receives.
In a standard sale, the total is divided between the listing brokerage and the buyer’s brokerage, often in a roughly even split.1Board of Governors of the Federal Reserve System. Commissions and Omissions: Trends in Real Estate Broker Compensation In a dual agency deal, no outside brokerage is involved, so the listing brokerage keeps the full amount. The practice is sometimes called “double-ending.” The individual agent handling both sides receives their share after the brokerage takes its cut, which commonly runs between 30 and 50 percent of the agent’s portion depending on their arrangement with the firm.
So the short answer stays the same as in any traditional sale: the seller funds the commission. The twist is that one firm is collecting all of it.
Why the 2024 NAR Settlement Changed the Buyer’s Side
In March 2024, the National Association of Realtors agreed to a $418 million settlement resolving antitrust lawsuits brought by home sellers who alleged the commission structure inflated costs.1Board of Governors of the Federal Reserve System. Commissions and Omissions: Trends in Real Estate Broker Compensation Two practice changes took effect on August 17, 2024, and both reach into dual agency deals.
Offers of compensation to a buyer’s agent can no longer appear on any Multiple Listing Service (MLS) platform. Sellers can still offer to pay a buyer’s agent, but the offer has to happen off the MLS, through direct communication, a brokerage website, or negotiation. Sellers can still advertise buyer concessions, such as help with closing costs, on the MLS.2National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers
Buyers working with a Realtor must now sign a written buyer-broker agreement before touring a home. That agreement has to spell out exactly how the buyer’s agent will be paid, as a flat fee, percentage, or hourly rate, and the amount cannot be left open-ended. It must also state clearly that commission rates are negotiable and not set by law.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
When the Buyer Can End Up Owing Money
If you sign a buyer-broker agreement promising your agent 2.5 percent, and the seller only offers 2 percent (or nothing at all), you are on the hook for the difference. In a dual agency setup, the same brokerage is already being paid by the seller under the listing agreement, and could in theory also collect from you under your buyer agreement unless the paperwork is structured to prevent that.
Before you consent to dual agency, read your buyer-broker agreement and confirm whether the seller’s payment satisfies your obligation or whether you could owe more on top. The brokerage cannot receive more total compensation than the amount specified in your written agreement.2National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers That ceiling is the main protection against paying twice.
Negotiating a Lower Rate When One Firm Keeps It All
Because the brokerage pockets the entire commission instead of splitting with another firm, sellers have real leverage to ask for a reduction. Some sellers write that reduction into the listing agreement from day one through a variable rate provision: a clause that drops the total commission if the listing agent also brings the buyer. A listing might set the rate at 5 percent for a standard sale and 3.5 percent if dual agency applies.
If your listing agreement does not include a variable rate provision, you can still negotiate a reduction when dual agency is proposed. The brokerage is already saving money by keeping the deal in-house, so asking for a lower rate is both reasonable and common. Put any agreed reduction in writing as an amendment to the listing agreement before the transaction moves forward.
The settlement did not eliminate variable rate provisions. It eliminated the advertising of commission splits on the MLS, which is a separate point. The provision still lives inside the listing agreement; it just no longer gets published to a shared platform.2National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers
Designated Agency: Same Payment Flow, Different Advocacy
Many states allow a middle-ground arrangement called designated agency, in which two different agents from the same brokerage each represent one side. The buyer’s agent owes full loyalty to the buyer, and the seller’s agent owes full loyalty to the seller, even though both work for the same firm.4National Association of REALTORS®. Consumer Guide: Agency and Non-Agency Relationships
From a commission standpoint, designated agency looks identical to dual agency: the full commission stays within one brokerage and the seller pays it from their proceeds. The practical difference is that each party keeps an agent who can actually advocate for them. If a brokerage proposes dual agency, ask whether designated agency is available instead.
One boundary worth knowing: roughly eight states, including Alaska, Colorado, Florida, Kansas, Texas, Vermont, and Wyoming, prohibit a single agent from representing both sides. In those states, the commission question still follows the standard pattern (the seller pays from proceeds), but the one-agent-both-sides version of the arrangement is not an option.
Protecting Your Money Before You Sign
A handful of steps keep the commission question from turning into an unpleasant surprise at closing.
- Sellers, negotiate the rate. The brokerage is keeping the full commission rather than splitting it. Even a one-point reduction on a $400,000 sale saves $4,000.
- Buyers, line up the paperwork. Confirm in writing that the seller’s commission payment satisfies your obligation under the buyer-broker agreement, so you are not exposed to a shortfall.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
- Read the dual agency disclosure before signing. The agent must obtain written consent from both sides before acting as a dual agent, and the disclosure should describe how the agent is compensated and what information cannot be shared.
- Consider hiring a real estate attorney. Since a dual agent cannot push for the best price on either side, an independent attorney can review the contract and the price terms for a fraction of what a bad deal would cost.
Dual agency works best when both parties already know roughly what they want and the deal terms are straightforward. In anything competitive or complicated, the commission savings from double-ending rarely outweigh the value of having someone whose only job is to represent you.