Conflicts of Interest and Steering in Residential Brokerage

American Economic Journal: Applied Economics 2017, 9(3): 191–222 https://doi.org/10.1257/app.20160214

32 Pages Posted: 10 Jul 2019

See all articles by Panle Jia Barwick

Panle Jia Barwick

Cornell University - Department of Economics

Parag A. Pathak

Massachusetts Institute of Technology (MIT) - Department of Economics

Maisy Wong

The Wharton School, University of Pennsylvania

Date Written: 2017

Abstract

This paper documents uniformity in real estate commission rates offered to buyers’ agents using 653,475 residential listings in eastern Massachusetts from 1998–2011. Properties listed with lower commission rates experience less favorable transaction outcomes: they are 5 percent less likely to sell and take 12 percent longer to sell. These adverse outcomes reflect the decreased willingness of buyers’ agents to intermediate low commission properties (steering), rather than heterogeneous seller preferences or reduced effort of listing agents. Offices with large market shares purchase a disproportionately small fraction of low commission properties. The negative outcomes for low commissions provide empirical support for regulatory concerns over steering.

JEL Classification: D82, L85, R21, R31

Suggested Citation

Barwick, Panle Jia and Pathak, Parag A. and Wong, Maisy, Conflicts of Interest and Steering in Residential Brokerage (2017). American Economic Journal: Applied Economics 2017, 9(3): 191–222 https://doi.org/10.1257/app.20160214. Available at SSRN: https://ssrn.com/abstract=3417241 or http://dx.doi.org/10.2139/ssrn.3417241

Panle Jia Barwick (Contact Author)

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States

Parag A. Pathak

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States

Maisy Wong

The Wharton School, University of Pennsylvania ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-746-3470 (Phone)

HOME PAGE: http://maisy.wharton.upenn.edu/

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