Is the Compensation Model for Real Estate Brokers Obsolete?

Thomas Miceli, Katherine Pancak () and C. Sirmans ()

The Journal of Real Estate Finance and Economics, 2007, vol. 35, issue 1, 7-22

Abstract: This study examines the traditional compensation model for real estate brokers under which both the listing and buyer brokers are paid by the seller based on a percentage of the property sales price. We argue that this model has not evolved to reflect contemporary legal agency relationships and technology-driven information availability. It therefore creates substantial transactional inefficiencies for buyers and sellers at both the matching and bargaining stages of a transaction. While there is evidence that market forces are pushing for a change in the status quo, there is also evidence that the brokerage industry is resisting this change by pursuing anti-competitive policies and laws. We explore the economics of the current and alternative compensation structures and suggest policy implications regarding anti-competitive behavior in the brokerage industry. Copyright Springer Science+Business Media, LLC 2007

Keywords: Agency; Brokerage; Multiple listings; Percentage commission (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:35:y:2007:i:1:p:7-22

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DOI: 10.1007/s11146-007-9026-x

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The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

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