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Asymmetric information and personal affiliations in brokered housing transactions
Author(s) -
Lopez Luis Arturo
Publication year - 2020
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 - 10.1111/1540-6229.12325
Subject(s) - licensee , real estate , license , valuation (finance) , information asymmetry , personally identifiable information , business , database transaction , economics , property (philosophy) , residential real estate , actuarial science , microeconomics , finance , law , computer science , computer security , philosophy , epistemology , political science , programming language
This research provides evidence on the role of information asymmetry and personal affiliations in housing transactions using a novel dataset that allows observation of detailed information about the property, broker, and seller. Sellers holding a real estate license are found to obtain about 1.6% (or $3,200) more for their properties than unlicensed sellers, and sellers personally affiliated to a real estate licensee (e.g., spouses, siblings, parents) also obtain a premium of about the same size, all else equal. There is evidence from appraisal training that knowledge of property valuation further increases the price disparities, while informative public property records reduce price disparities. Agents and personal affiliates of agents appear to use information advantages to time the market and capture capital gains. These new findings provide insights into the behaviors of market participants in asymmetric information environments.