The Impact of Contract Type on Broker Performance: Submarket Effects

Ronald Rutherford, Thomas Springer and Abdullah Yavas

Journal of Real Estate Research, 2004, vol. 26, issue 3, 277-298

Abstract: Rutherford, Springer and Yavas (2001) develop and empirically test a model that analyzes the effect the type of listing contract, either exclusive agency (EA) or exclusive right to sell (ERTS), has on the performance of the agent/broker. This paper extends the work of Rutherford et al. and looks at differences between housing submarkets delineated by price. The results show a selling price discount associated with both broker-effected and owner-effected sales for lower-priced houses with EA contracts. For higher-priced houses, there is no price advantage to an EA-listing if the broker achieves the sale, but if the owner sells the house, there is a modest price premium associated with the sale. The primary implication of the results is that owners of lower-priced houses should be wary of alternative listing arrangements, namely EA contracts.

Date: 2004
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DOI: 10.1080/10835547.2004.12091138

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