Matching of Buyers and Sellers by Brokers: A Comparison of Alternative Commission Structures

REAL ESTATE ECONOMICS, Vol. 24 No. 1

Posted: 18 May 1998

See all articles by Abdullah Yavas

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics

Abstract

This note characterizes the set of Pareto optimal and stable matchings among buyers and sellers and examines the optimality of matching strategies employed by brokers under different commission structures. It is shown that the profit-maximizing matching strategy for the broker under percentage commission and flat-fee systems also maximizes the number of houses sold, but it minimizes the buyers' and sellers' surplus. On the other hand, net listing results in the sale of fewer houses, but it yields larger surplus for buyers and sellers.

JEL Classification: R30

Suggested Citation

Yavas, Abdullah, Matching of Buyers and Sellers by Brokers: A Comparison of Alternative Commission Structures. REAL ESTATE ECONOMICS, Vol. 24 No. 1. Available at SSRN: https://ssrn.com/abstract=9078

Abdullah Yavas (Contact Author)

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

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