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How Exclusive Homebuyer Representation Contracts Help Keep Commissions High

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  • Borys Grochulski
  • Zhu Wang

Abstract

Real estate agents use exclusive buyer representation contracts to capture homebuyers and thus limit outside options of home sellers. With outside options severely limited, home sellers pay high commissions (up to 6 percent) to sell their homes on the platform of real estate agents. A ban on exclusive buyer representation contracts is strongly pro-competitive: It improves the sellers' outside options and forces the platform to reduce real estate commissions to constrained-efficient levels.

Suggested Citation

  • Borys Grochulski & Zhu Wang, 2025. "How Exclusive Homebuyer Representation Contracts Help Keep Commissions High," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 25(35), September.
    • Handle: RePEc:fip:fedreb:101755
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    File URL: https://www.richmondfed.org/publications/research/economic_brief/2025/eb_25-35
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