A Note on Buyer's Agent Commision and Sales Price

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A Note on Buyer's Agent Commision and Sales Price

Author Info

Joachim Zietz () (Middle Tennessee State University, Murfreesboro, TN)
Bobby Newsome () (Morehead State University, Morehead, KY)

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Joachim Zietz

Abstract

The article examines whether and to what extent the level of a buyer’s agent commission will affect the sale price of a house. The estimation results suggest that a higher commission rate leads to a higher sale price, although only for lower-priced houses. It is suggested that, at least for this market segment, there may be a principal-agent problem: buyer’s agents do not act in the best interest of their clients because of the institutional structure of sales commissions.

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Article provided by American Real Estate Society in its journal Journal of Real Estate Research.

Volume (Year): 21 (2001)
Issue (Month): 3 ()
Pages: 245-254
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Handle: RePEc:jre:issued:v:21:n:3:2001:p:245-254

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L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

G. Donald Jud, 1983. "Real Estate Brokers and the Market for Residential Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 11(1), pages 69-82. [Downloadable!] (restricted)
Hall, Alastair, 1987. "The Information Matrix Test for the Linear Model," Review of Economic Studies, Blackwell Publishing, vol. 54(2), pages 257-63, April. [Downloadable!] (restricted)
Other versions:
- Hall, A.R., 1984. "The Information Matrix Test for the Linear Model," The Warwick Economics Research Paper Series (TWERPS) 250, University of Warwick, Department of Economics.
Elder, Harold W & Zumpano, Leonard V & Baryla, Edward A, 1999. "Buyer Search Intensity and the Role of the Residential Real Estate Broker," The Journal of Real Estate Finance and Economics, Springer, vol. 18(3), pages 351-68, May. [Downloadable!] (restricted)
Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-94, September. [Downloadable!] (restricted)
White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Joachim Zietz & Bobby Newsome, 2002. "Agency Representation and the Sale Price of Houses," Journal of Real Estate Research, American Real Estate Society, vol. 24(2), pages 165-192. [Downloadable!]

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