Is Dual Agency in Real Estate a Cause for Concern?
Cornell University - Samuel Curtis Johnson Graduate School of Management
Indiana University - Kelley School of Business - Department of Business Economics & Public Policy
Daniel H. Simon
Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)
March 1, 2008
Johnson School Research Paper Series No. 08-07
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
Date posted: October 4, 2007 ; Last revised: May 13, 2014
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