Agency Choice and Financial Consequences: Evidence from the Australian housing market

Song Shi and Junji Xiao

ERES from European Real Estate Society (ERES)

Abstract: This paper studies the seller’s agency choice and the financial consequences of this decision. Specifically, at sale, sellers can choose to use either the agency they originally purchased the house from, or a different agency. Our empirical findings suggest that sellers choose agencies for house sales based on past purchase experience and current market shares of agencies. A premia analysis on pair sale transactions also suggests using the same agency is financially suboptimal, resulting in a 1.1--1.4% price discount. These results are consistent with agency theory--using the same agency with more information may not be financially in the interest of principals.

Keywords: agency choice; Asymmetric Information; Principal agent problem; real estate brokerage (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2023_273

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