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Is Dual Agency in Real Estate a Cause for Concern?Vrinda KadiyaliCornell University - Samuel Curtis Johnson Graduate School of Management Jeffrey PrinceIndiana University - Kelley School of Business Daniel H. SimonIndiana University Bloomington - School of Public & Environmental Affairs (SPEA) March 1, 2008 Johnson School Research Paper Series No. 08-07 Abstract: We examine the effects of the regulation of dual agency in residential real estate transactions, for 10,888 transactions in Long Island, New York in 2004-2007. We find that dual agency has an overall null effect on sale price, but includes two opposing forces where buyer and seller interests might be compromised. The link between dual agency and timing of sales is less clear. These findings are robust to endogeneity bias. Although it appears dual agency does cause some market distortions, our analysis yields little evidence that prohibiting dual agency in real estate will increase welfare.
Number of Pages in PDF File: 48 Keywords: Conflict of interest, real estate, first resort selling, strategic pricing, leaning on the seller, time-to-sale JEL Classification: K21, L41, L42, L85 working papers seriesDate posted: October 4, 2007 ; Last revised: July 18, 2012Suggested CitationContact Information
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