Real-Estate Agent Commission Structure and Sales Performance

Abstract

We estimate the effect of broker characteristics on sales performance on a large dataset of residential real estate transactions in the Netherlands from 1985 to 2011. Using house fixed-effects, we find that large brokers, brokers who are close by, and brokers on a fixed-price commission, sell faster. Experienced brokers sell slightly slower, but at marginally better prices. Brokers with a fixed-price commission structure sell faster, at better prices. With neighborhood fixed-effects instead of house fixed-effects, broker effects become more pronounced, suggesting that brokers' location is not random, but related to the intra-neighborhood housing market. The effects are robust to different econometric specifications and corrections for selection effects.

Keywords: real-estate brokers, broker incentives, housing, agency

JEL Classification: D80, L10, L80, R20, R30