How Exclusive Homebuyer Representation Contracts Help Keep Commissions High

Borys Grochulski and Zhu Wang

Richmond Fed Economic Brief, 2025, vol. 25, issue 35

Abstract: Real estate agents use exclusive buyer representation contracts to capture homebuyers and thus limit outside options of home sellers. With outside options severely limited, home sellers pay high commissions (up to 6 percent) to sell their homes on the platform of real estate agents. A ban on exclusive buyer representation contracts is strongly pro-competitive: It improves the sellers' outside options and forces the platform to reduce real estate commissions to constrained-efficient levels.

Keywords: housing; and; housing; finance (search for similar items in EconPapers)
Date: 2025
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