Agency Representation and the Sale Price of Houses

Abstract

Multiple Listing Service data are employed to examine how the type of agency representation influences the sale price of a residential property. The results differ by property size. The type of agency representation is relevant only for some segments of the market, mainly smaller- to medium-sized properties. For a certain range of property sizes, buyers who engage a buyer's agent pay on average 2% less. However, an above average buyer's agent commission can more than cancel this price effect. Buyers that engage a buyer's agent that comes from the same firm as the listing agent never pay more for a house.