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Equilibrium of Housing and Real Estate Brokerage Markets Under Uncertainty

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  • Chunchi Wu
  • Peter F. Colwell

Abstract

The purpose of this paper is to develop a model of the real estate brokerage and housing markets with imperfect information. The paper considers general equilibrium in these markets with and without a multiple listing service. Input prices are found to affect the equilibrium housing price, brokerage commission, and split factor. The introduction of a multiple listing service is found to have several important effects. The MLS causes housing value to increase, but its effect on the commission rate is indeterminate. Contrary to the results of another paper, MLS brokers, on average, will likely undertake more search for both buyers and listings than will a non‐MLS broker. The primary reasons are related to the greater efficiency of search in the MLS context.

Suggested Citation

  • Chunchi Wu & Peter F. Colwell, 1986. "Equilibrium of Housing and Real Estate Brokerage Markets Under Uncertainty," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 14(1), pages 1-23, March.
    • Handle: RePEc:bla:reesec:v:14:y:1986:i:1:p:1-23
    DOI: 10.1111/1540-6229.00366
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    Cited by:

    1. Darren K. Hayunga & R. Kelley Pace, 2017. "List Prices in the US Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 55(2), pages 155-184, August.
    2. Geoffrey Turnbull & Jonathan Dombrow, 2006. "Spatial Competition and Shopping Externalities: Evidence from the Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 32(4), pages 391-408, June.
    3. John D. Benjamin & G. Donald Jud & G. Stacy Sirmans, 2000. "Real Estate Brokerage and the Hosting Market: An Annotated Bibliography," Journal of Real Estate Research, American Real Estate Society, vol. 20(1), pages 217-278.
    4. Peimin Chen & Igor Kozhanov & Peng Liu & Chunchi Wu, 2021. "Commercial Mortgage‐Backed Security Pricing with Real Estate Liquidity Risk," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S2), pages 490-525, September.
    5. Abdullah Yavas & Peter F. Colwell, 1995. "A Comparison of Real Estate Marketing Systems: Theory and Evidence," Journal of Real Estate Research, American Real Estate Society, vol. 10(5), pages 583-600.
    6. Maoguo Wu & Rui Xie, 2015. "Impact of Internet Usage on Residential Real Estate Brokerage Firms’ Financial Performance: Evidence from Nanjing, China," International Journal of Management Sciences, Research Academy of Social Sciences, vol. 6(11), pages 515-528.
    7. John D. Benjamin & G. Donald Jud & G. Stacy Sirmans, 2000. "What Do We Know About Real Estate Brokerage?," Journal of Real Estate Research, American Real Estate Society, vol. 20(1), pages 5-30.
    8. Han, Lu & Strange, William C., 2015. "The Microstructure of Housing Markets," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 813-886, Elsevier.
    9. Geoffrey Turnbull & Jonathan Dombrow, 2007. "Individual Agents, Firms, and the Real Estate Brokerage Process," The Journal of Real Estate Finance and Economics, Springer, vol. 35(1), pages 57-76, July.
    10. Fabrice Larceneux & Thomas Lefebvre, 2016. "The " Bad Deal " Illusion," Post-Print halshs-01671084, HAL.
    11. James D. Shilling & C. F. Sirmans, 1988. "The Effects of Occupational Licensing on Complaints Against Real Estate Agents," Journal of Real Estate Research, American Real Estate Society, vol. 3(2), pages 1-9.
    12. Edward A. Baryla & Leonard V. Zumpano, 1995. "Buyer Search Duration in the Residential Real Estate Market: The Role of the Real Estate Agent," Journal of Real Estate Research, American Real Estate Society, vol. 10(1), pages 1-14.
    13. James E. Larsen & Won J. Park, 1989. "Non‐Uniform Percentage Brokerage Commissions and Real Estate Market Performance," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(4), pages 422-438, December.
    14. Steven Stelk & Leonard V. Zumpano, 2017. "Can Real Estate Brokers Affect Home Prices Under Extreme Market Conditions?," International Real Estate Review, Global Social Science Institute, vol. 20(1), pages 51-73.
    15. Sirmans, C. F. & Turnbull, Geoffrey K., 1997. "Brokerage Pricing under Competition," Journal of Urban Economics, Elsevier, vol. 41(1), pages 102-117, January.
    16. Lingxiao Li & Abdullah Yavas, 2015. "The Impact of a Multiple Listing Service," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 471-506, June.
    17. Marcus T. Allen & William H. Dare & Lingxiao Li, 2018. "MLS Information Sharing Intensity and Housing Market Outcomes," The Journal of Real Estate Finance and Economics, Springer, vol. 57(2), pages 297-313, August.

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