Client Externality Effects Of Agents Selling Their Own Properties

Keywords

Asymmetric information; Moral hazard; Principal/Agent conflict

Abstract

This study is the first to examine the principal-agent issues surrounding how agents’ efforts to sell their own properties affect their efforts to sell concurrently listed client properties. The principal-agent model shows that listed agent-owned properties induce agents to worker harder over all, but diminish effort dedicated to marketing concurrently listed client properties, leading to reduced liquidity and/or lower selling prices for those properties. The empirical results show that client properties competing with agent-owned properties remain on the market 30 to 46 % longer and sell for 1.8 % less than properties whose agents have no such conflict of interest.

Publication Date

2-1-2017

Publication Title

Journal of Real Estate Finance and Economics

Volume

54

Issue

2

Number of Pages

139-164

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1007/s11146-015-9543-y

Socpus ID

84950235562 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84950235562

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