39 Pages Posted: 19 Jun 2000
Date Written: May 2000
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: 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