Is there a Principal-Agency Problem with Real Estate Agents in Rental Markets?

Luis A. Lopez ()
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Luis A. Lopez: University of Illinois at Chicago

The Journal of Real Estate Finance and Economics, 2024, vol. 69, issue 1, No 2, 29-69

Abstract: Abstract This paper examines the principle-agency problem between landlords and real estate agents using novel data on rental contracts. Real estate agents are found to obtain higher contract rents by approximately 1% more for themselves (and family members) than for other landlords, which is economically small. The results suggest that the principle-agency program with real estate agents is less of a concern in the rental market than the ownership market. The reason potentially relates to the commission structure, the relatively low effort associated with finding a tenant, the landlord’s ability to evaluate an agent’s performance, and reputation concerns from repeated interactions.

Keywords: Rent; Housing returns; Tenant search; Landlords; Intermediaries; D8; D14; R30 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11146-022-09927-8

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