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The Impact of Dual Agency

Posted: 30 Jan 2007  

J'Noel Gardiner


Jeffrey Heisler

Boston University - Department of Finance & Economics

Crocker H. Liu

Arizona State University

Jarl G. Kallberg

New York University (NYU) - Department of Finance


In 1984, the State of Hawaii's legislature enacted a law making it mandatory for real estate agents engaged in dual agency relationships (i.e., when the seller's and the buyer's agents are employed by the same real estate firm) to disclose this fact to both parties in writing. The assumption was that the dual agency relation was damaging to the seller. This study analyzes the effect of disclosed and undisclosed dual agency, and the impact of the legislation, using data prior to and after the legislation (approximately 2,000 residential sales in each period). To account for property characteristics, hedonic models for the log of sale price and for the log of days on market are estimated in each period. Our empirical analysis suggests that dual agency significantly reduced the sale price, but the influence was much smaller after the legislation (8.0% versus 1.4%). In addition, dual agency significantly decreased the time on market by approximately 8.5% pre-legislation and 8.1% post-legislation, although the influence was much stronger for lower priced residences. These results are confirmed using a seemingly unrelated regression model.

Keywords: brokerage, property law, real estate services

Suggested Citation

Gardiner, J'Noel and Heisler, Jeffrey and Liu, Crocker H. and Kallberg, Jarl G., The Impact of Dual Agency. Journal of Real Estate Finance and Economics, Vol. 35, No. 1, 2007. Available at SSRN:

J'Noel Gardiner

Independent ( email )

No Address Available

Jeffrey Heisler

Boston University - Department of Finance & Economics ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States
(617) 353-4614 (Phone)
(617) 353-6667 (Fax)


Crocker H. Liu

Arizona State University ( email )

W.P. Carey School of Business
P.O. Box 873906
Tempe, AZ 85287-3906
United States
480-965-3259 (Phone)
480-965-8539 (Fax)


Jarl G. (Jerry) Kallberg (Contact Author)

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0339 (Phone)
212-995-4233 (Fax)

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