Equilibrium in Housing and Brokerage Markets under Uncertainty

The purpose of this paper is to develop a model of the real estate brokerage and housing markets with imperfect information. The paper considers general equilibrium in these markets with and without a multiple listing service. Input prices are found to affect the equilibrium housing price, brokerage...

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Bibliographic Details
Main Authors: WU, Chunchi, Colwell, Peter
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 1986
Subjects:
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/823
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Institution: Singapore Management University
Language: English
Description
Summary:The purpose of this paper is to develop a model of the real estate brokerage and housing markets with imperfect information. The paper considers general equilibrium in these markets with and without a multiple listing service. Input prices are found to affect the equilibrium housing price, brokerage commission, and split factor. The introduction of a multiple listing service is found to have several important effects. The MLS causes housing value to increase, but its effect on the commission rate is indeterminate. Contrary to the results of another paper, MLS brokers, on average, will likely undertake more search for both buyers and listings than will a non-MLS broker. The primary reasons are related to the greater efficiency of search in the MLS context.