The Real Estate Brokerage: Commissioned Sales and Market Values
This paper develops a valuation model of the real estate brokerage firm. A brokerage has a positive market valuation, while having a negligible book value. Options theory is used to value the firm. The firm writes an option by taking a contingent claim on income generated, through the commission split. The firm holds other options, including the right to modify the commission split. A valuation model for the firm permits a hiring strategy to be developed. Brokers vary by characteristics such as experience. Whether it is better to hire an experienced licensee over a rookie depends on the expected future career with the firm, commissions generated, and the achievement of sales targets. The value of a superstar to the firm is determined, to permit incentive structures on the commission to be generated.
Volume (Year): 3 (1988)
Issue (Month): 2 ()
|Contact details of provider:|| Postal: |
Web page: http://www.aresnet.org/
|Order Information:|| Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323|
Web: http://pages.jh.edu/jrer/about/get.htm Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ronn, Ehud I & Verma, Avinash K, 1986. " Pricing Risk-Adjusted Deposit Insurance: An Option-Based Model," Journal of Finance, American Finance Association, vol. 41(4), pages 871-95, September.
- James R. Frew & G. Donald Jud, 1986. "The Value of a Real Estate Franchise," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 14(2), pages 374-383.
When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:3:n:2:1988:p:37-51. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (JRER Graduate Assistant/Webmaster)
If references are entirely missing, you can add them using this form.