Is Dual Agency in Real Estate a Cause for Concern?
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We examine the effects of the regulation of dual agency in residential real estate transactions, for 10,888 transactions in Long Island, New York in 2004–2007. We find that dual agency has an overall null effect on sale price, but includes two opposing forces where buyer and seller interests might be compromised. The link between dual agency and timing of sales is less clear. These findings are robust to endogeneity bias. Although it appears dual agency does cause some market distortions, our analysis yields little evidence that prohibiting dual agency in real estate will increase welfare.
KeywordsConflict of interest Real estate Strategic pricing Leaning on the seller Time-to-sale
The authors thank Ellie Cohn, Aaron Moss, David Simon, and Michael Waldman for very helpful discussions, the Johnson School Dean’s Research Lunch and International Industrial Organization Conference participants for comments, Norman Mendolsohn for data, and Lars Backstrom for research assistance.
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