DP12587 Real-Estate Agent Commission Structure and Sales Performance

Author(s): Pieter A. Gautier, Arjen Siegmann, Aico van Vuuren
Publication Date: January 2018
Keyword(s): agency, broker incentives, Housing, real-estate brokers
JEL(s): D80, L10, L80, R20, R30
Programme Areas: Labour Economics, Financial Economics, Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12587

Do higher real-estate agent fees imply better performance? This study uses a nation-wide data set of residential real-estate transactions in the Netherlands from 1985 to 2011 to provide evidence against this. Brokers with a flat fee structure who charge an up-front fee (which is substantially lower than the average fee of traditional brokers) and leave the viewings to the seller sell faster and at -on average- 2.7 percent higher prices. We correct for fixed house- and time effects. We provide additional evidence that sellers who chose for a flat fee broker were the ones who benefitted most from them.