Evidence of Information Asymmetries in the Market for Residential Condominiums

Posted: 28 Jan 2007

See all articles by Ronald C. Rutherford

Ronald C. Rutherford

University of Texas at San Antonio - Department of Finance

Thomas M. Springer

Florida Atlantic University - Department of Finance & Real Estate

Abdullah Yavas

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

Abstract

Previous research (Rutherford et al., 2005; Levitt and Syverson, 2005) identify and quantify agency problems in the brokerage of single-family houses. Real estate agents are found to receive a premium when sellling their own houses in comparison to similar client-owned houses. Given the homogeneity of the condominium market in comparison to the single-family house market, we use a large sample of condominium transactions to examine if agency problems exist in the condominium market. Controlling for sample selection and endogeneity bias of the data, we find evidence for a similar price premium for agent-owned condominiums. In contrast to the results for single-family houses in the same geographic market, we find that agent-owned condominiums must stay on the market longer to receive a higher price.

Keywords: agency theory, percentage commission contract, residential brokerage

Suggested Citation

Rutherford, Ronald C. and Springer, Thomas M. and Yavas, Abdullah, Evidence of Information Asymmetries in the Market for Residential Condominiums. Journal of Real Estate Finance and Economics, Vol. 35, No. 1, 2007. Available at SSRN: https://ssrn.com/abstract=959698

Ronald C. Rutherford

University of Texas at San Antonio - Department of Finance ( email )

San Antonio, TX 78249
United States

Thomas M. Springer

Florida Atlantic University - Department of Finance & Real Estate ( email )

5353 Parkside Drive
Jupiter, FL 33458
United States
561-297-2914 (Phone)
561-297-3686 (Fax)

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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