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Broker Duty to Clients: Why States Mandate Minimum Service Requirements


  • Anupam Nanda


  • Katherine A. Pancak

    (University of Connecticut)


Since 2004, ten U.S. states have enacted laws that mandate real estate brokers to provide real estate consumers with a minimum level of services. The federal government and the academic literature suggest that such state laws are a result of anti-competitive industry collusion, and serve no consumer protection justification. This paper attempts to determine the factors that led states to adopt minimum service requirements, despite significant federal opposition. The analytical structure employs hazard models, using a unique set of economic and institutional attributes for 50 U.S. states from 2000 to 2007. Contrary to initial expectations based on the literature, our results indicate that both strength of a state.s Realtor association and broker membership on real estate licensing boards decrease, rather than increase, the likelihood of state adoption of broker minimum service requirements. Factors that do increase the likelihood of adoption include higher state licensing complaints and a democratically controlled state legislature.

Suggested Citation

  • Anupam Nanda & Katherine A. Pancak, 2009. "Broker Duty to Clients: Why States Mandate Minimum Service Requirements," Alumni working papers 2009-01, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:alumni:2009-01
    Note: Authors acknowledge helpful comments from John Clapp. All remaining errors are ours.

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    References listed on IDEAS

    1. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
    2. Thomas Miceli & Katherine Pancak & C. Sirmans, 2007. "Is the Compensation Model for Real Estate Brokers Obsolete?," The Journal of Real Estate Finance and Economics, Springer, vol. 35(1), pages 7-22, July.
    3. Anupam Nanda, 2008. "Property Condition Disclosure Law: Why Did States Mandate ‘Seller Tell All’?," The Journal of Real Estate Finance and Economics, Springer, vol. 37(2), pages 131-146, August.
    4. de Figueiredo, Rui J P, Jr & Vanden Bergh, Richard G, 2004. "The Political Economy of State-Level Administrative Procedure Acts," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 569-588, October.
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    More about this item


    Minimum Services; Hazard Model;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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