NDLI: Agent Change and Seller Bargaining Power: A Case of Principal Agent Problem in the Housing Market

Content Provider	Springer Nature Link
Author	Daneshvary, Nasser Clauretie, Terrence M.
Copyright Year	2012
Abstract	When a seller hires an agent to sell his/her property, a successful outcome depends on the list price, marketing time, unobserved relative bargaining power of the buyers and sellers, and the effort levels of the seller and the seller’s agent. A divergence with respect to the list/transaction prices and the expected effort levels between seller and agent will create a principal-agent interest conflict. This conflict in some cases results in an agent change before the house is sold. The change will reduce the relative bargaining power of the seller, affecting the observed marketing time and transaction price. This study estimates the effects of an agent change on marketing time and transaction price after controlling for degree of overpricing, list-price revisions, marketing time, and endogenous selection bias. Our results show that: (1) on average, an agent change increases the marketing time by about 3 months and adversely affects the transaction price by about 2.7 %. Furthermore, we found that an agent change before the expiration of the listing contract, compared to that of after the expiration, has a smaller effect on the marketing time (2.3 vs. 3.8 months) and has a smaller transaction price discount (2.1 % vs. 4.2 %).
Starting Page	416
Ending Page	433
Page Count	18
File Format	PDF
ISSN	08955638
Journal	The Journal of Real Estate Finance and Economics
Volume Number	47
Issue Number	3
e-ISSN	1573045X
Language	English
Publisher	Springer US
Publisher Date	2012-03-21
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Agency problem Agent change Bargaining power Regional/Spatial Science Finance/Investment/Banking
Content Type	Text
Resource Type	Article
Subject	Finance Urban Studies Accounting Economics and Econometrics

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
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3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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