Conflicts of Interest and the Realtor Commission Puzzle / Panle Jia Barwick, Parag A. Pathak, Maisy Wong.

Format:

Book

Author/Creator:

Barwick, Panle Jia.

Contributor:

National Bureau of Economic Research.

Pathak, Parag A.

Wong, Maisy.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21489.

NBER working paper series no. w21489

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

This paper documents uniformity in real estate commission rates across markets and time using a dataset on realtor commissions for 653,475 residential listings in eastern Massachusetts from 1998-2011. Newly established real estate brokerage offices charging low commissions grow more slowly than comparable entrants with higher commissions. Properties listed with lower commission rates experience less favorable transaction outcomes: they are 5% less likely to sell and take 12% longer to sell. These adverse outcomes reflect decreased willingness of buyers' agents to intermediate low commission properties (steering) rather than heterogeneous seller preferences or reduced effort of listing agents. While all agents and offices prefer properties with high commissions, firms and agents with large market shares purchase a disproportionately small fraction of low commission properties. The negative outcomes for low commissions provide empirical support for regulatory concerns that steering reinforces the uniformity of commissions.

Notes:

Print version record

August 2015.