Agent Change and Seller Bargaining Power: A Case of Principal Agent Problem in the Housing Market

Agent Change and Seller Bargaining Power: A Case of Principal Agent Problem in the Housing Market When a seller hires an agent to sell his/her property, a successful outcome depends on the list price, marketing time, unobserved relative bargaining power of the buyers and sellers, and the effort levels of the seller and the seller’s agent. A divergence with respect to the list/transaction prices and the expected effort levels between seller and agent will create a principal-agent interest conflict. This conflict in some cases results in an agent change before the house is sold. The change will reduce the relative bargaining power of the seller, affecting the observed marketing time and transaction price. This study estimates the effects of an agent change on marketing time and transaction price after controlling for degree of overpricing, list-price revisions, marketing time, and endogenous selection bias. Our results show that: (1) on average, an agent change increases the marketing time by about 3 months and adversely affects the transaction price by about 2.7 %. Furthermore, we found that an agent change before the expiration of the listing contract, compared to that of after the expiration, has a smaller effect on the marketing time (2.3 vs. 3.8 months) and has a smaller transaction price discount (2.1 % vs. 4.2 %). http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Real Estate Finance and Economics Springer Journals

Agent Change and Seller Bargaining Power: A Case of Principal Agent Problem in the Housing Market

Loading next page...
 
/lp/springer_journal/agent-change-and-seller-bargaining-power-a-case-of-principal-agent-ALFTLY63WW
Publisher
Springer US
Copyright
Copyright © 2012 by Springer Science+Business Media, LLC
Subject
Economics / Management Science; Regional/Spatial Science; Finance/Investment/Banking
ISSN
0895-5638
eISSN
1573-045X
D.O.I.
10.1007/s11146-012-9369-9
Publisher site
See Article on Publisher Site

Abstract

When a seller hires an agent to sell his/her property, a successful outcome depends on the list price, marketing time, unobserved relative bargaining power of the buyers and sellers, and the effort levels of the seller and the seller’s agent. A divergence with respect to the list/transaction prices and the expected effort levels between seller and agent will create a principal-agent interest conflict. This conflict in some cases results in an agent change before the house is sold. The change will reduce the relative bargaining power of the seller, affecting the observed marketing time and transaction price. This study estimates the effects of an agent change on marketing time and transaction price after controlling for degree of overpricing, list-price revisions, marketing time, and endogenous selection bias. Our results show that: (1) on average, an agent change increases the marketing time by about 3 months and adversely affects the transaction price by about 2.7 %. Furthermore, we found that an agent change before the expiration of the listing contract, compared to that of after the expiration, has a smaller effect on the marketing time (2.3 vs. 3.8 months) and has a smaller transaction price discount (2.1 % vs. 4.2 %).

Journal

The Journal of Real Estate Finance and EconomicsSpringer Journals

Published: Mar 21, 2012

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create lists to
organize your research

Export lists, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off