A Study On The Selection Of Commission System Of The Real Estate Brokerage Under Double Moral Hazard

From the 90's in 20th century, China began the reform of housing system, change the former public housing distribution system into the existing private housing. From then on, commercial housing market began to appear and substantial increase in housing transactions began to emerge, with the increase in real estate transactions, real estate brokerage industry has gradually developed.In recent years, China's real estate brokerage developed rapidly, although develops of real estate brokerage industry optimizes the real estate market allocation of resources, but accompany with the development, emerged a lot of problems. In these problems, the most prominent is moral hazard problem. Because there is Principal-agent relationship between real estate broker and the client, moral hazard problem can be avoided, especially at this stage that China's real estate intermediary industry not ripe enough, the low quality of employee, the imperfect of relevant laws and the credit system of the whole society, result in the moral hazard problem in China's real estate market is so acute.In the transaction process of real estate market, there are three commission systems are available for broker and clients choose to signing the contract, named percentage commission system, flat-fee and net listing commissions especially, the probabilities of occurrence of moral hazard from the agent and clients are different in different commission systems. Therefore, this article argues that a reasonable choice of the commission system can be used as an important measure to inhibit the double moral hazard problem in real estate market. The past studies of the commission system in the real estate market are mostly from the perspective of the incentives for broker, only consider the risk of moral hazard that may occur by the agent, but overlooked that clients will also have the occurrence of moral hazard. This paper argues that not only the broker may have moral hazard behavior; the client also has the possibility to occur moral hazard problems, from this perspective, to study the three commission system that used in real estate market transactions comparatively.Firstly, this article defines the connotation of commission system in real estate agency; and then establishes a selection criterion of commission system from three parts: moderation, effective incentive and consistency; thirdly give an explanation about the composition and genesis of double moral hazard problems in real estate market. On this basis, this article divides the relationship between clients and broker into two kinds: unilateral and bilateral principal-agent, and discusses the probabilities of moral hazard problem that may occur by clients and brokers under three different kinds of commission systems. Result show that unlike the real condition that percentage commission is widely used in our country, this paper argues as long as the appropriate reserve price has been established, net-listing commission is the optimal commission that will enable probabilities of double moral hazard problem lowest. Finally, give some suggestions from the perspective of reduce double moral hazard problem.