Finance Seminar（2014-38）

Topic: In-House Transactions in the Real Estate Brokerage Industry: Matching Outcome or Strategic Promotion?

Speaker: Lu Han, University of Toronto

Time: Friday, 19 December, 10:00-11:30

Location: Room 217, Guanghua Building 2

Abstract: This paper examines to what extent agents' strategic incentives explain in-house transactions for which buyers and sellers are represented by the same brokerage. We construct an agent-intermediated search model that predicts both strategically-promoted and matching-based in-house transactions. Taking these predictions to home transaction data, we find that agents are more likely to promote internal listings when they are financially rewarded and such effect becomes weaker when consumers are more aware of agents' incentives. We further develop a structural model and find that about one third of in-house transactions are explained by agents' strategic promotion, causing significant utility loss for homebuyers.