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Does It Matter Whom an Agent Serves? Evidence from Recent Changes in Real Estate Agency Law

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  • Curran, Christopher
  • Schrag, Joel

Abstract

Recent changes in real estate law hastened the shift from a seller's agency regime, in which real estate agents serve the interests of sellers, to a buyer's agency regime, in which agents serve the interests of buyers. Using data from the Atlanta real estate market, we show that the shift to buyer's agency led to a significant decline in real estate prices in the market for relatively expensive houses, while real estate prices did not significantly change in the market for relatively inexpensive homes. In both markets, the average time needed to sell a house fell after the change in agency regimes. These results are consistent with a conclusion that a shift to buyer's agency improves the efficiency of the search process. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Curran, Christopher & Schrag, Joel, 2000. "Does It Matter Whom an Agent Serves? Evidence from Recent Changes in Real Estate Agency Law," Journal of Law and Economics, University of Chicago Press, vol. 43(1), pages 265-284, April.
    • Handle: RePEc:ucp:jlawec:v:43:y:2000:i:1:p:265-84
    DOI: 10.1086/467455
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    References listed on IDEAS

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    1. Wheaton, William C, 1990. "Vacancy, Search, and Prices in a Housing Market Matching Model," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1270-1292, December.
    2. Yavas Abdullah, 1995. "Can Brokerage Have an Equilibrium Selection Role?," Journal of Urban Economics, Elsevier, vol. 37(1), pages 17-37, January.
    3. Salant, Stephen W, 1991. "For Sale by Owner: When to Use a Broker and How to Price the House," The Journal of Real Estate Finance and Economics, Springer, vol. 4(2), pages 157-173, June.
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    Cited by:

    1. Jeremy R. Groves & Eric Helland, 2002. "Zoning and the Distribution of Location Rents: An Empirical Analysis of Harris County, Texas," Land Economics, University of Wisconsin Press, vol. 78(1), pages 28-44.
    2. Edward Rosenthal, 2011. "A Pricing Model for Residential Homes with Poisson Arrivals and a Sales Deadline," The Journal of Real Estate Finance and Economics, Springer, vol. 42(2), pages 143-161, February.
    3. Thomas Miceli & Katherine Pancak & C. Sirmans, 2007. "Is the Compensation Model for Real Estate Brokers Obsolete?," The Journal of Real Estate Finance and Economics, Springer, vol. 35(1), pages 7-22, July.
    4. Vrinda Kadiyali & Jeffrey Prince & Daniel Simon, 2014. "Is Dual Agency in Real Estate a Cause for Concern?," The Journal of Real Estate Finance and Economics, Springer, vol. 48(1), pages 164-195, January.
    5. J’Noel Gardiner & Jeffrey Heisler & Jarl Kallberg & Crocker Liu, 2007. "The Impact of Dual Agency," The Journal of Real Estate Finance and Economics, Springer, vol. 35(1), pages 39-55, July.
    6. Han, Lu & Strange, William C., 2015. "The Microstructure of Housing Markets," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 813-886, Elsevier.
    7. Yun-chien Chang, 2010. "An Empirical Study of Compensation Paid in Eminent Domain Settlements: New York City, 1990-2002," The Journal of Legal Studies, University of Chicago Press, vol. 39(1), pages 201-244, January.
    8. Sahin, M. Abdullah & Sirmans, C.F. & Yavas, Abdullah, 2013. "Buyer brokerage: Experimental evidence," Journal of Housing Economics, Elsevier, vol. 22(4), pages 265-277.
    9. Pablo Mendez, 2016. "Professional experts and lay knowledge in Vancouver’s accessory apartment rental market," Environment and Planning A, , vol. 48(11), pages 2223-2238, November.
    10. Yun‐chien Chang, 2011. "An Empirical Study of Court‐Adjudicated Takings Compensation in New York City: 1990–2003," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 8(2), pages 384-412, June.

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