Real Estate Brokers and Commission: Theory and Calibrations
AbstractThis paper has two goals: (a) To model an inherent conflict of interest between a seller of a house and the real estate broker hired by the seller. In this environment, the pressure brokers exert on sellers to reduce prices generates faster sales and hence reduces sellers’ expected profit. (b) To calibrate the brokers’ commission rates that would maximize sellers’ expected gain. The calibration results may hint whether the ongoing uniform commission rate reflects collusion among real estate agencies, or should be viewed as competitive. Copyright Springer Science+Business Media, LLC 2012
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Bibliographic InfoArticle provided by Springer in its journal The Journal of Real Estate Finance and Economics.
Volume (Year): 45 (2012)
Issue (Month): 4 (November)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=102945
Real estate brokers; Selling a house; Conflict of interest; Middleman; Commission; Price fixing; Loss aversion; L85;
Other versions of this item:
- Oz Shy, 2009. "Real estate brokers and commission: theory and calibrations," Working Papers 09-8, Federal Reserve Bank of Boston.
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
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