verage) and wind up with better prices. Suppose that real estate agents earn a commission eoual to 3% of the sale value of each house that they help sel. Suppose a real estate apent has an offer on a house of s200,000. The agent can pet a s higher offer with more effort and by leaving the house on the market for a few more weeks. * the apent sells the house now, he wil eam a commission of - By keeping the house on the market and erpending more effort to Thut, the agent paine el the house, the agent can earn a commission of tor the etra effort and time of ping the house on the market. oose a real estate apent has an offer on a house that he owns. The apent has a curent offer of s200,000. but can pet a s higher offer with more effort and by leaving the house on the market for a fen more weeks. Assume that all of the commission ls paid back to the agent, since he will ket as the agent for the sale. the agent wats to sel the house, he painss more than selling the house now. Since this amount is than what he would gain y waiting to sell a house he does not own (as in the first part of the problem), the agent is ely to keep a house on the market and expend more effort to sell a house that he owns, as opposed to one that he does not own.
verage) and wind up with better prices. Suppose that real estate agents earn a commission eoual to 3% of the sale value of each house that they help sel. Suppose a real estate apent has an offer on a house of s200,000. The agent can pet a s higher offer with more effort and by leaving the house on the market for a few more weeks. * the apent sells the house now, he wil eam a commission of - By keeping the house on the market and erpending more effort to Thut, the agent paine el the house, the agent can earn a commission of tor the etra effort and time of ping the house on the market. oose a real estate apent has an offer on a house that he owns. The apent has a curent offer of s200,000. but can pet a s higher offer with more effort and by leaving the house on the market for a fen more weeks. Assume that all of the commission ls paid back to the agent, since he will ket as the agent for the sale. the agent wats to sel the house, he painss more than selling the house now. Since this amount is than what he would gain y waiting to sell a house he does not own (as in the first part of the problem), the agent is ely to keep a house on the market and expend more effort to sell a house that he owns, as opposed to one that he does not own.
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.6P
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Transcribed Image Text:When real estate apents sell their own, rather than dients, houses, they leave the houses on the market for a longer time (10 davs longer on
average) and wind up with better prices.
Suppose that real estate apents earn a commission equal to 3% of the sale value of each house that they help sel. Suppose a real estate apent has
an offer on a house of s200,000. The agent can pet 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, he wil ean a commission of
|. By keeping the house on the market and expending more etfort to
sel the house, the apert can earn a commission of
Thus, the agent paine E
for the extra effort and time of
keeping the house on the market.
Supoose a real estate agent has an offer on a house that he owns. The agent has a current offer of s200,000. but can pt 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 commission is paid back to the agent since he will
act as the agent for the sale.
If the agent waits to sel the house, he gains
more than selling the house now. Since this amount is than what he would gain
by waiting to sell a house he does not own (as in the first part of the problem), the agent is key to keep a house on the market and expend
more effort to sell a house that he owns, as opposed to one that he does not own.
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