Minimum Service Requirements, Limited Brokers and Menuing of Services

Abstract

In the past few years, many states have responded to the increasing number of limited service brokers by passing minimum service requirements. Limited service brokers can be viewed as those brokers who are offering their marketing and representative services A La Carte as opposed to the more traditional full-services brokers offering of a Table D’hote (one size fits all) for their services. Supporters claim the legislation is necessary to protect consumers who are otherwise hurt by limited service brokers, but critics assert that this legislation is anti-competitive and not necessary. This study provides empirical evidence that sellers using limited service brokers experience a trade-off between a higher selling price and longer marketing spans with accompanying lower probabilities of finding a buyer during a given marketing period.