Do real estate agents have information advantages in housing markets?

• Main Authors: AGARWAL, Sumit, HE, Jia, SING, Tien Foo, SONG, Changcheng
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Bargaining power; Housing market; Information advantages; Market distortion; Real estate agents; Finance; Finance and Financial Management; Real Estate
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6379; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7378/viewcontent/1_s20_S0304405X19301229_main.pdf
• Institution: Singapore Management University

We use a large housing transaction data set in Singapore to study whether real estate agents use information advantages to buy houses at bargain prices. Agents bought their own houses at prices that are 2.54% lower than comparable houses bought by other buyers. Consistent with information asymmetries, agent buyers have more information advantages in less informative environments, and agent buyers are more likely to buy houses from agent sellers. Agent discounts are from both “cherry picking” and bargaining power, and bargaining power contributes more to the agent discounts. Agents’ advantage consists in their information of available houses and previous purchase prices.