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The Impacts of Contract Type on Broker Performance: Submarket Effects

  • R.C. Rutherford

    ()

    (DEPARTMENT OF FINANCE, UNIVERSITY OF TX - SAN ANTONIO, 6900 N LOOP, 1604 W SAN ANTONIO, TX)

  • T.M. Springer

    ()

    (DEPT OF INDUSTRY STUDIES, FLORIDA ATLANTIC UNIVERSITY, 5353 PARKSIDE DR, JUPITER, FL)

  • A. Yavas

    (Penn State University)

Rutherford et al. (2001) develop and empirically test a model that analyzes the effect the type of listing contract, either exclusive agency (EA) or exclusive right to sell (ERTS), has on the performance of the agent/broker. This paper extends the work of Rutherford et al. (2001) and looks at differences between housing submarkets delineated by price. The results show a selling price discount associated with both broker-effected and owner-effected sales for lower-priced houses with EA contracts. For higher-priced houses, there is no price advantage to an EA-listing if the broker achieves the sale, but if the owner sells the house, there is a modest price premium associated with the sale. The primary implication of the results is that owners of lower-priced houses should be wary of alternative listing arrangements, namely exclusive agency contracts.

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

Volume (Year): 26 (2004)
Issue (Month): 3 ()
Pages: 277-298

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Handle: RePEc:jre:issued:v:26:n:3:2004:p:277-298
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  1. Michael A. Arnold, 1999. "Search, Bargaining and Optimal Asking Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(3), pages 453-481.
  2. David Geltner & Brian D. Kluger & Norman G. Miller, 1991. "Optimal Price and Selling Effort from the Perspectives of the Broker and Seller," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(1), pages 1-24.
  3. Anglin, Paul M & Arnott, Richard, 1991. "Residential Real Estate Brokerage as a Principal-Agent Problem," The Journal of Real Estate Finance and Economics, Springer, vol. 4(2), pages 99-125, June.
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