Efficiency and Inventives in Residential Brokerage

Posted: 19 Dec 2012

See all articles by Raymond T. Brastow

Raymond T. Brastow

Longwood College

Thomas M. Springer

Florida Atlantic University - Department of Finance & Real Estate

Bennie D. Waller

Longwood University

Date Written: December 18, 2012

Abstract

The literature on broker intermediation in residential real estate has shown positive pricing effects associated with the use of a broker and mixed results as far as the pricing effects of nonstandard commission structures. On the premise that real estate broker incentives emanate from two primary sources, factors that increase broker operating efficiency and negotiable features arising from the relationship between the listing broker and the seller, this study assesses the degree to which these incentives affect the marketing time, probability of sale, and selling price of single-family houses. Of particular interest, this study investigates efficiency and broker intermediation effects on residential property associated with a broker concentrating his listings into a service area. Empirical results show that properties within an individual broker's GIS-determined service area are more likely to sell, sell faster, and sell with an associated price premium. These effects are more concentrated in the market for higher priced homes. Also, additional compoensation favorably motivates the broker with higher-priced properties, but has no effect on the sale of lower-priced properties.

Keywords: Real estate brokerage, Broker incentives, Housing Markets, Broker intermediation, Broker efficiency, Transaction efficiency

Suggested Citation

Brastow, Raymond T. and Springer, Thomas M. and Waller, Bennie D., Efficiency and Inventives in Residential Brokerage (December 18, 2012). Journal of Real Estate Finance and Economics, Vol. 45, No. 4, 2012, Available at SSRN: https://ssrn.com/abstract=2191105

Raymond T. Brastow

Longwood College ( email )

School of Business and Economics
Farmville, VA
United States
804-395-2370 (Phone)
804-395-2203 (Fax)

Thomas M. Springer (Contact Author)

Florida Atlantic University - Department of Finance & Real Estate ( email )

5353 Parkside Drive
Jupiter, FL 33458
United States
561-297-2914 (Phone)
561-297-3686 (Fax)

Bennie D. Waller

Longwood University ( email )

201 High Street
Farmville, VA 23909
United States
434-395-2046 (Phone)
434-395-2203 (Fax)

HOME PAGE: http://www.benniewaller.com

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