What Is the Expected Impact of Industry Disruptors on the Real

question 7

Multiple Choice

What is the expected impact of industry disruptors on the real estate industry?

• A)elimination of real estate agents
• B)the 6 percent realtor commission paid in the United States moving closer to the 1 percent commission commonly paid in other countries
• C)greater specialization of real estate agents with higher commissions
• D)Increased competition and bidding wars to find and buy homes

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Definitions:

Agency Problem

A conflict of interest inherent in any relationship where one party is expected to act in the best interest of another.

Moral Hazard

A condition in which a person can benefit, usually financially, by acting unethically or immorally, i.e., the person is tempted to be less than honest and ethical. An insurance term. A moral hazard exists when executive compensation is heavily based on the market price of the company’s stock.

Arbitrage

The practice of taking advantage of price differences in different markets to make a profit.

Money Markets

Financial markets focused on short-term borrowing and lending with maturities of less than one year, dealing in instruments like Treasury bills and commercial paper.