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Agency Choice and Financial Consequences: Evidence from the Australian housing market

Author

Listed:
  • Song Shi
  • Junji Xiao

Abstract

This paper studies the seller’s agency choice and the financial consequences of this decision. Specifically, at sale, sellers can choose to use either the agency they originally purchased the house from, or a different agency. Our empirical findings suggest that sellers choose agencies for house sales based on past purchase experience and current market shares of agencies. A premia analysis on pair sale transactions also suggests using the same agency is financially suboptimal, resulting in a 1.1--1.4% price discount. These results are consistent with agency theory--using the same agency with more information may not be financially in the interest of principals.

Suggested Citation

  • Song Shi & Junji Xiao, 2023. "Agency Choice and Financial Consequences: Evidence from the Australian housing market," ERES eres2023_273, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2023_273
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2023-273
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    More about this item

    Keywords

    agency choice; Asymmetric Information; Principal agent problem; real estate brokerage;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    NEP fields

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