Sent: Monday, March 14, 2022 5:36 PM
Subject: Real Estate Broker Question
Dear Dr. Block,
I’m always told house prices would collapse if there were no real estate brokers and their transaction costs, but is this true?
Perhaps prices wouldn’t otherwise be lower; a seller would still want to sell for the price the buyer was still going pay for it. Perhaps the seller would just retain a greater share of that price at best? Perhaps the price would be lower but not in a productive way: a less informed market about whose selling where and what would lead to lower demand, so the house you paid ‘x’ for in the real world is now some price less than ‘x’ in this hypothetical world but you can’t find it.
What is the correct way to think about this?
From: Walter Block <[email protected]>
Sent: Tuesday, March 15, 2022 1:51 PM
Subject: RE: Real Estate Broker Question
Here are two definitions:
What is a thick market?
A thick market has a high number of buyers and sellers, which means that there is a high volume of trade and a low level of price volatility.
What Is a Thin Market? A thin market on any financial exchange is a period of time that is characterized by a low number of buyers and sellers, whether it’s for a single stock, a whole sector, or the entire market. A thin market, also known as a narrow market, can lead to price volatility.
Brokers, stock brokers, real estate brokers, newsletters, want adverts, make markets thicker; thus less volatile. I don’t think they either raise or lower prices
Walter4:29 am on March 19, 2022