The potential risks of information asymmetry to buyers in the real estate market include overpaying for a property, buying a property with undisclosed issues, and being at a disadvantage in negotiations due to lack of information. This is because real estate agents may have more knowledge about the market and may use coded language to communicate information that the buyer is not privy to.
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Author Steven Levitt, working with journalist Stephen Dubner, shows how economic theories can be used to analyze social issues. Each of the six essays...
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Real estate agents profit from information asymmetry. They know a great deal about the housing market and also use code words to communicate with each other. They may hint that there is a problem in the market, to get owners to sell faster; or, they may use coded language in a listing to pass along information to other agents.