Housing price spillovers after real estate agent fee reduction: evidence from the German housing market

Using a micro dataset of dwellings listed for sale, this study documents a significant decline in the average REAF paid by homebuyers. Findings from hedonic difference-in-differences regressions, with binary and continuous treatment approaches, supplemented by an event study design, suggest that the REAF reduction leads to higher dwelling prices, indicating a price pass-through effect. The effect appears stronger in high-demand housing markets and for apartments compared to single-family houses and less sought-after regions. Additionally, significant relative volume effects indicate shifts in transaction composition. These findings highlight the role of transaction costs in shaping housing prices and market structure, with implications for housing affordability and policy design.