Bargaining Power and the Choice of Brokerage Contract
Finance, Real Estate, and Business Law
The exclusive right to sell listing contract is believed to be preferable to the exclusive agency listing contract because it gives the listing broker more incentive to put effort into the sale of the home and earn a commission. Researchers have developed theory and reported evidence to support that sellers are worse off by choosing the exclusive agency contract because brokers are going to exert less effort. In this study, I frame the question differently by developing a model based on combined bargaining power rather than broker effort and show how the greater potential bargaining power of the exclusive agency contract can impact the selling price, time on market, and probability of sale.
Journal of Housing Research
Goodwin, K. R.
(2019). Bargaining Power and the Choice of Brokerage Contract. Journal of Housing Research, 28(1), 129-144.
Available at: https://aquila.usm.edu/fac_pubs/16480