IDEAS home Printed from https://ideas.repec.org/a/fip/fedreb/97915.html
   My bibliography  Save this article

Real Estate Commissions and Home Search Efficiency

Author

Listed:
  • Borys Grochulski
  • Zhu Wang

Abstract

In the U.S. residential housing market, homebuyers' agents typically offer free house showings and collect a commission equal to 3 percent of the price of the home bought by their clients. Our analysis shows that, by deviating from cost basis, this compensation structure may lead to elevated home prices, overused agent services and prolonged home searches. We explain that shifting to a simple a la carte compensation structure may improve home search efficiency and social welfare.

Suggested Citation

  • Borys Grochulski & Zhu Wang, 2024. "Real Estate Commissions and Home Search Efficiency," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 24(08), March.
    • Handle: RePEc:fip:fedreb:97915
    as

    Download full text from publisher

    File URL: https://www.richmondfed.org/publications/research/economic_brief/2024/eb_24-08
    File Function: Briefing
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedreb:97915. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Pascasio (email available below). General contact details of provider: https://edirc.repec.org/data/frbrius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.