Is the Compensation Model for Real Estate Brokers Obsolete?
AbstractThis study examines the traditional compensation model for real estate brokers under which both the listing and buyer brokers are paid by the seller based on a percentage of the property sales price. We argue that this model has not evolved to reflect contemporary legal agency relationships and technology-driven information availability. It therefore creates substantial transactional inefficiencies for buyers and sellers at both the matching and bargaining stages of a transaction. While there is evidence that market forces are pushing for a change in the status quo, there is also evidence that the brokerage industry is resisting this change by pursuing anti-competitive policies and laws. We explore the economics of the current and alternative compensation structures and suggest policy implications regarding anti-competitive behavior in the brokerage industry. Copyright Springer Science+Business Media, LLC 2007
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Bibliographic InfoArticle provided by Springer in its journal The Journal of Real Estate Finance and Economics.
Volume (Year): 35 (2007)
Issue (Month): 1 (July)
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Web page: http://www.springerlink.com/link.asp?id=102945
Agency; Brokerage; Multiple listings; Percentage commission;
Other versions of this item:
- Thomas J. Miceli & Katherine A. Pancak & C. F. Sirmans, 2006. "Is the Compensation Model for Real Estate Brokers Obsolete?," Working papers 2006-23, University of Connecticut, Department of Economics.
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
- R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets
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