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How Much do Real Estate Brokers Add? A Case Study

  • B. Douglas Bernheim

    ()

    (Department of Economics, Stanford University)

  • Jonathan Meer

    ()

    (Department of Economics, Stanford University)

Sales commissions for residential real estate brokers historically average nearly six percent of a home’s closing price. Do brokers add sufficient value to justify those commissions? We address this question using a unique data set pertaining to sales of faculty and staff homes on the Stanford University campus. We find no evidence that the use of a broker leads to higher average selling prices, or that it significantly alters average initial asking prices. However, those who use brokers sell their houses more quickly.

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File URL: http://www-siepr.stanford.edu/repec/sip/06-041.pdf
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Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 06-041.

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Date of creation: Aug 2007
Date of revision:
Handle: RePEc:sip:dpaper:06-041
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Web page: http://siepr.stanford.edu

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  1. Igal Hendel & Aviv Nevo & François Ortalo-Magné, 2007. "The Relative Performance of Real Estate Marketing Platforms: MLS versus FSBOMadison.com," NBER Working Papers 13360, National Bureau of Economic Research, Inc.
  2. Jonathan Meer & Edward Van Wesep, 2007. "A Test of Confidence Enhanced Performance: Evidence from US College Debaters," Discussion Papers 06-042, Stanford Institute for Economic Policy Research.
  3. 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.
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