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An Optimal Incentive System For Real Estate Agents

Author: Timothy E. Jares, James E. Larsen and Thomas S. Zorn

Start Page: 44
End Page: 59
Volume: 20
Issue Number: 1
Year: 2000
Publication: Journal of Real Estate Research

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.

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