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Brokerage, Intermediation, and Agency: The Financing and Pricing of Commercial Properties

39 Pages Posted: 19 Jun 2000  

Mark J. Garmaise

University of California, Los Angeles (UCLA) - Anderson School of Management

Tobias J. Moskowitz

Yale University, Yale SOM; AQR Capital; National Bureau of Economic Research (NBER)

Date Written: May 2000

Abstract

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.

JEL Classification: R31

Suggested Citation

Garmaise, Mark J. and Moskowitz, Tobias J., Brokerage, Intermediation, and Agency: The Financing and Pricing of Commercial Properties (May 2000). CRSP Working Paper No. 517. Available at SSRN: https://ssrn.com/abstract=231468 or http://dx.doi.org/10.2139/ssrn.231468

Mark J. Garmaise (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Tobias J. Moskowitz

Yale University, Yale SOM ( email )

New Haven, CT 06520
United States

HOME PAGE: http://som.yale.edu/tobias-j-moskowitz

AQR Capital ( email )

Greenwich, CT
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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