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Do Real Estate Brokers Add Value When Listing Services Are Unbundled?


  • B. Douglas Bernheim
  • Jonathan Meer


This paper measures the effects of real estate brokerage services provided to sellers, other than MLS listings, on the terms and timing of home sales. It is not obvious that sellers benefit from those services. On the one hand, brokers offer potentially useful knowledge and expertise. On the other hand, because the relationship between the homeowner and the broker resembles a classical principal-agent problem, the broker may not deploy services in ways that promote the seller's interests. Yet as long as valuable MLS listings are bundled with brokerage services, homeowners may use brokers even if the agency costs exceed the benefits of brokers' knowledge and expertise. Thus, quantification of the net value of brokerage services other than MLS listings bears directly on the recent policy debate over the desirability unbundling of MLS listings. We estimate the effect of a seller's decision to use a broker on list prices, selling prices, and speed of sale for a real estate market with an unusual and critical characteristic: it has a single open-access listing service that is used by essentially all sellers, regardless of whether they employ brokers. Our central finding is that, when listings are not tied to brokerage services, a seller's use of a broker reduces the selling price of the typical home by 5.9 to 7.7 percent, which indicates that agency costs exceed the advantages of brokers' knowledge and expertise by a wide margin.

Suggested Citation

  • B. Douglas Bernheim & Jonathan Meer, 2008. "Do Real Estate Brokers Add Value When Listing Services Are Unbundled?," NBER Working Papers 13796, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:13796
    Note: PE

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    References listed on IDEAS

    1. Steven D. Levitt & Chad Syverson, 2008. "Market Distortions When Agents Are Better Informed: The Value of Information in Real Estate Transactions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 599-611, November.
    2. Igal Hendel & Aviv Nevo & François Ortalo-Magné, 2009. "The Relative Performance of Real Estate Marketing Platforms: MLS versus," American Economic Review, American Economic Association, vol. 99(5), pages 1878-1898, December.
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    Cited by:

    1. Wojciech Kopczuk & David Munroe, 2015. "Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 214-257, May.
    2. Pieter Gautier & Arjen Siegmann & Aico van Vuuren, 2017. "Real-Estate Agent Commission Structure and Sales Performance," Tinbergen Institute Discussion Papers 17-049/VI, Tinbergen Institute.
    3. repec:kap:rqfnac:v:49:y:2017:i:1:d:10.1007_s11156-016-0583-z is not listed on IDEAS
    4. Panle Jia Barwick & Parag A. Pathak & Maisy Wong, 2015. "Conflicts of Interest and the Realtor Commission Puzzle," NBER Working Papers 21489, National Bureau of Economic Research, Inc.
    5. Han, Lu & Strange, William C., 2015. "The Microstructure of Housing Markets," Handbook of Regional and Urban Economics, Elsevier.
    6. repec:aea:aejapp:v:9:y:2017:i:3:p:191-222 is not listed on IDEAS
    7. Beck, Jason & Scott, Frank & Yelowitz, Aaron, 2010. "Competition and market structure in local real estate markets," MPRA Paper 27531, University Library of Munich, Germany.
    8. Edward P. Lazear, 2014. "The Impatient Salesperson and the Delegation of Pricing Authority," NBER Working Papers 20529, National Bureau of Economic Research, Inc.
    9. Maria Eugénia Sanin, 2009. "Choosing a trading counterpart in the U.S. acid rain market," Working Papers hal-00437636, HAL.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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