Brokerage, Intermediation, and Agency: The Financing and Pricing of Commercial Properties
Mark J. Garmaise
University of California, Los Angeles (UCLA) - Anderson School of Management
Tobias J. Moskowitz
AQR Capital; University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
CRSP Working Paper No. 517
This paper examines a novel form of financial intermediation by studying the role of professional property brokers in the commercial real estate market. We find that broker intermediation is an important feature of the financing of commercial properties. Controlling for endogenous broker selection, we determine that hiring a broker significantly increases the probability of obtaining a bank loan by a striking 18 percent. We find, however, that brokers have only a modest effect on the sale price. Our results are most consistent with the theory that brokers and lending institutions establish informal relationships and provide less support for theories of broker monitoring or certification.
Number of Pages in PDF File: 39
JEL Classification: R31
Date posted: June 19, 2000
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