when real estate agents sell their own, rather than clients', houses, they leave the houses on the market for a longer time (10 days longer onaverage) and wind up wth better prices.Suppose that real estate agents earn a commission equal to 3% of the sale value of each house that they help selI. Suppose a real estate agent hasan offer on a house of $600,000. The agent can get a 4% higher offer with more effort and by leaving the house on the market for a few more weeks.If the agent sells the house now, she will earn a commisslon of SBy keeping the house on the market and expending more effortto sell the house, the agent can earn a commisslon of $Thus, the agent galnsfor the extra effort and time ofkeeping the house on the market.Suppose a real estate aqent has an offer on a house that she owns. The agent has a curTent offer of $600,000, but can get a 4% higher offer withmore effort and by leaving the house on the market for a few more weeks. Assume that all of the commisslon Is pald back to the agent, since she willact as the agent for the sale.than what sheIf the agent walts to sell the house, she galnsmore than selling the house now. Since this amount Islikely to keep a house on thewould gain by walting to sell a house she does not own (as In the first part of the problem), the agent ismarket and expend more effort to sell a house that she owns, as opposed to one that she does not own.

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Answered: when real estate agents sell their own,…

when real estate agents sell their own, rather than cllents', houses, they leave the houses on the market for a longer time (10 days longer on average) and wind up wth better prices.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

when real estate agents sell their own, rather than clients', houses, they leave the houses on the market for a longer time (10 days longer on
average) and wind up wth better prices.
Suppose that real estate agents earn a commission equal to 3% of the sale value of each house that they help selI. Suppose a real estate agent has
an offer on a house of $600,000. The agent can get a 4% higher offer with more effort and by leaving the house on the market for a few more weeks.
If the agent sells the house now, she will earn a commisslon of S
By keeping the house on the market and expending more effort
to sell the house, the agent can earn a commisslon of $
Thus, the agent galns
for the extra effort and time of
keeping the house on the market.
Suppose a real estate aqent has an offer on a house that she owns. The agent has a curTent offer of $600,000, but can get a 4% higher offer with
more effort and by leaving the house on the market for a few more weeks. Assume that all of the commisslon Is pald back to the agent, since she will
act as the agent for the sale.
than what she
If the agent walts to sell the house, she galns
more than selling the house now. Since this amount Is
likely to keep a house on the
would gain by walting to sell a house she does not own (as In the first part of the problem), the agent is
market and expend more effort to sell a house that she owns, as opposed to one that she does not own.

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