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The Impacts of Contract Type on Broker Performance
Author(s) -
Rutherford Ronald C.,
Springer Thomas M.,
Yavas Abdullah
Publication year - 2001
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1080-8620.00016
Subject(s) - agency (philosophy) , listing (finance) , negotiation , business , yield (engineering) , real estate , spot contract , contract management , agency cost , economics , finance , microeconomics , marketing , law , corporate governance , philosophy , materials science , epistemology , political science , metallurgy , futures contract , shareholder
This paper offers a theoretical and empirical analysis of the exclusive agency and exclusive‐right‐to‐sell contracts used in real estate brokerage. The theoretical model predicts that while both contract types will yield the same price, the exclusive agency contract will result in faster sales than the exclusive‐right‐to‐sell contract. In the empirical model, we find that houses sold faster under the exclusive agency contract than the exclusive‐right‐to‐sell contract. However, houses sold with exclusive agency contracts also sold at a marginally lower price. We also find a slightly greater concession from the listing price at the negotiation stage of exclusive agency listings.