The Impact of Contract Type on Broker Performance: Submarket Effects
Ronald C. Rutherford
University of Texas at San Antonio - Department of Finance
Thomas M. Springer
Florida Atlantic University - Department of Finance & Real Estate
University of Wisconsin-Madison
Journal of Real Estate Research Vol. 26, No. 3, 2004
Rutherford, Springer and Yavas (2001) develop and empirically test a model that analyzes the effect the type of listing contract, either exclusive agency (EA) or exclusive right to sell (ERTS), has on the performance of the agent/broker. This paper extends the work of Rutherford et al. and looks at differences between housing submarkets delineated by price. The results show a selling price discount associated with both broker-effected and owner-effected sales for lower-priced houses with EA contracts. For higher-priced houses, there is no price advantage to an EA listing if the broker achieves the sale, but if the owner sells the house, there is a modest price premium associated with the sale. The primary implication of the results is that owners of lower-priced houses should be wary of alternative listing arrangements, namely EA contracts.
Number of Pages in PDF File: 22
Keywords: listing contract, exclusive agency, exclusive right
JEL Classification: H31, P36, L85, P46,R20,R21,R31,D10,D11,D12,D13,R11Accepted Paper Series
Date posted: December 28, 2006
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