An Optimal Incentive System For Real Estate Agents

Authors

Timothy E. Jares, University of North FloridaFollow
James E. Larsen, Wright State University,Follow
Thomas S. ZornFollow

Date of this Version

2000

Comments

Published in Journal of Real Estate Research Volume 20, Number 1/2 (2000), pp. 49-59. JRER does not permit re-posting, so a link to the full-text online document is provided here:
http://aux.zicklin.baruch.cuny.edu/jrer/papers/abstract/past/av20n0102/v20n0102a03.htm

Abstract

This article presents an alternative system for selling real estate. It overcomes the well-known deficiencies of the percentage commission system. In our system, the agent purchases the property from the seller and simultaneously receives a put option. The put option gives the agent the right to put the property back to the original owner. It is shown that this system has many of the desirable properties of a dealer system, while avoiding some of the problems that are inherent in that system.