Do Laws Influence the Cost of Real Estate Brokerage Services? A State Fixed Effects Approach

50 Pages Posted: 13 Oct 2016

See all articles by Anupam Nanda

Anupam Nanda

University of Reading - Real Estate Finance

John M. Clapp

University of Connecticut - Department of Finance; Homer Hoyt Institute

Katherine A. Pancak

University of Connecticut - School of Business - Center for Real Estate and Urban Economic Studies

Date Written: Winter 2016

Abstract

A FTC‐DOJ study argues that state laws and regulations may inhibit the unbundling of real estate brokerage services in response to new technology. Our data show that 18 states have changed laws in ways that promote unbundling since 2000. We model brokerage costs as measured by number of agents in a state‐level annual panel vector autoregressive framework, a novel way of analyzing wasteful competition. Our findings support a positive relationship between brokerage costs and lagged house price and transactions. We find that change in full‐service brokers responds negatively (by well over two percentage points per year) to legal changes facilitating unbundling.

Suggested Citation

Nanda, Anupam and Clapp, John M. and Pancak, Katherine A., Do Laws Influence the Cost of Real Estate Brokerage Services? A State Fixed Effects Approach (Winter 2016). Real Estate Economics, Vol. 44, Issue 4, pp. 918-967, 2016, Available at SSRN: https://ssrn.com/abstract=2851645 or http://dx.doi.org/10.1111/1540-6229.12124

Anupam Nanda (Contact Author)

University of Reading - Real Estate Finance ( email )

United States

John M. Clapp

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-983-3685 (Phone)
860-486-0349 (Fax)

Homer Hoyt Institute ( email )

United States

HOME PAGE: http://hoytgroup.org/weimer-school-and-fellows/

Katherine A. Pancak

University of Connecticut - School of Business - Center for Real Estate and Urban Economic Studies ( email )

368 Fairfield Road
Storrs, CT 06269
United States
860-486-1275 (Phone)
860-486-0349 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
297
PlumX Metrics