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Who Is “Misleading” Whom in Real Estate Transactions?

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  • Jia Xie

Abstract

The observation that real estate agents sell their clients' homes cheaper and faster than their own homes has been well identified in the literature and interpreted as evidence of an agency problem originated from information asymmetry. This article studies whether this well‐known result holds true for all types of agents and clients, and whether information asymmetry is the full story. By using the Multiple Listing Service (MLS) data from Indiana, we find that, after controlling for observables, mainly homes owned by institutional clients are sold cheaper and faster than agent‐owned homes, and the differences are mainly driven by less and moderately experienced agents. Besides information asymmetry, we also find evidence of motivation heterogeneity—institutions themselves are very motivated to sell, and therefore are willing to sell cheaper in order to sell faster.

Suggested Citation

  • Jia Xie, 2018. "Who Is “Misleading” Whom in Real Estate Transactions?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 46(3), pages 527-558, September.
    • Handle: RePEc:bla:reesec:v:46:y:2018:i:3:p:527-558
    DOI: 10.1111/1540-6229.12196
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    Cited by:

    1. Hungria Gunnelin, Rosane, 2020. "Bidding strategies and winner’s curse in auctions of non-distressed residential real estate," Working Paper Series 20/13, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    2. Thomas J. Emmerling & Abdullah Yavas & Yildiray Yildirim, 2021. "To accept or not to accept: Optimal strategy for sellers in real estate," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 268-296, March.
    3. Jia Xie, 2019. "The Optimal Selling Strategy of Residential Real Estate," The Journal of Real Estate Finance and Economics, Springer, vol. 59(3), pages 461-489, October.
    4. Daniel Broxterman & Tingyu Zhou, 2023. "Information Frictions in Real Estate Markets: Recent Evidence and Issues," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 203-298, February.
    5. Darren K. Hayunga & Henry J. Munneke, 2021. "Examining Both Sides of the Transaction: Bargaining in the Housing Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(2), pages 663-691, June.
    6. Ping Cheng & Zhenguo Lin & Yingchun Liu, 2021. "Competing Selling Strategies in the Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 63(3), pages 394-413, October.
    7. Peng Liu & Jia Xie, 2021. "Optimal Contract Design in Residential Brokerage," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(2), pages 493-530, June.
    8. Luis Arturo Lopez, 2021. "Asymmetric information and personal affiliations in brokered housing transactions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(2), pages 459-492, June.
    9. Kimberly F. Luchtenberg & Michael J. Seiler & Hua Sun, 2019. "Listing Agent Signals: Does a Picture Paint a Thousand Words?," The Journal of Real Estate Finance and Economics, Springer, vol. 59(4), pages 617-648, November.
    10. Peter Chinloy & Cheng Jiang & Kose John, 2022. "Spreads and Volatility in House Returns," JRFM, MDPI, vol. 15(8), pages 1-16, August.

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