Departmental Bulletin Paper Is Dual Agency in Housing Transactions Ethically Acceptable?: A Japan-U.S. Comparison

Okoshi, Toshiyuki

This paper focuses on the problem of real estate agentsʼ disloyalty to their clients (buyers or sellers of houses) caused by asymmetric information, and compares several previous studies in the US to this research on the effects of dual agency deals in Japan. Dual agency means that the same real estate agent represents both seller and buyer in a housing transaction. Furthermore, this paper considers whether dual agency can be ethically accepted in housing transactions. The important point is that dual agency distorts the sale price of houses, that is, it causes information failure. Therefore, Japan should enact certain restrictions, such as the US disclosure requirements of dual agency status, into law or into the ethical codes of the real estate industry.

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