Determinants of dual agency transactions: broker steering, consumer behavior, or market frictions?

This study addresses the factors affecting dual agency, a key principal-agent conflict in residential brokerage. We identify commission splits, pricing strategies, contract duration, and search costs as the key determinants shaping listing brokers’ incentives to promote internal rather than cross-agency matches. The empirical results confirm our theoretical predictions regarding these agency problems. Properties with the lowest commission splits (<2.0%) exhibit a 57.6%-point higher predicted probability of dual-agency transactions compared to the omitted category (commission splits >3%). Pricing effects are tiered: lower-priced homes are less likely to transact via dual agency, while moderate- and higher-priced homes exhibit significantly higher probabilities (up to 36.1%). Furthermore, longer listing contract durations and higher search costs for external brokers (e.g., limited MLS information and “hip-pocket” listings) both statistically increase the likelihood of internal matches. These results indicate that dual-agency outcomes are shaped not merely by search frictions but also by contractual and informational levers under the listing broker’s control, with important implications for brokerage regulation, information disclosure, and consumer protection in housing markets.