Is Dual Agency in Real Estate a Cause for Concern?

48 Pages Posted: 4 Oct 2007 Last revised: 13 May 2014

See all articles by Vrinda Kadiyali

Vrinda Kadiyali

Cornell University - Samuel Curtis Johnson Graduate School of Management

Jeffrey Prince

Kelley School of Business, Indiana University

Daniel H. Simon

Indiana University Bloomington - O'Neill School of Public and Environmental Affairs

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Date Written: March 1, 2008

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.

Keywords: Conflict of interest, real estate, first resort selling, strategic pricing, leaning on the seller, time-to-sale

JEL Classification: K21, L41, L42, L85

Suggested Citation

Kadiyali, Vrinda and Prince, Jeffrey and Simon, Daniel H., Is Dual Agency in Real Estate a Cause for Concern? (March 1, 2008). Johnson School Research Paper Series No. 08-07, Available at SSRN: https://ssrn.com/abstract=1019069 or http://dx.doi.org/10.2139/ssrn.1019069

Vrinda Kadiyali

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States
607-255-1985 (Phone)
607-254-4590 (Fax)

Jeffrey Prince (Contact Author)

Kelley School of Business, Indiana University ( email )

1309 E. Tenth Street
Kelley School of Business
Bloomington, IN 47405
United States
8128562692 (Phone)
47405 (Fax)

HOME PAGE: http://https://kelley.iu.edu/jeffprin/

Daniel H. Simon

Indiana University Bloomington - O'Neill School of Public and Environmental Affairs ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

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