Conflicts of Interest and Steering in Residential Brokerage
American Economic Journal: Applied Economics 2017, 9(3): 191–222 https://doi.org/10.1257/app.20160214
32 Pages Posted: 10 Jul 2019
Date Written: 2017
This paper documents uniformity in real estate commission rates offered to buyers’ agents using 653,475 residential listings in eastern Massachusetts from 1998–2011. Properties listed with lower commission rates experience less favorable transaction outcomes: they are 5 percent less likely to sell and take 12 percent longer to sell. These adverse outcomes reflect the decreased willingness of buyers’ agents to intermediate low commission properties (steering), rather than heterogeneous seller preferences or reduced effort of listing agents. Offices with large market shares purchase a disproportionately small fraction of low commission properties. The negative outcomes for low commissions provide empirical support for regulatory concerns over steering.
JEL Classification: D82, L85, R21, R31
Suggested Citation: Suggested Citation