Money & WorkMental model
Your estate agent wants to sell. Not necessarily at the best price.
The principal-agent problem arises when you let someone act for you who has their own interests and more knowledge. The agent gets a percentage of the price; a quick sale at 5% less costs them little and you a lot. Managers, doctors, tradespeople, financial advisers: the same structure everywhere. Solutions are transparency, oversight and incentives that align both sides.
Useful: Ask of every intermediary: do they earn more when I do better, or just when the deal closes?
Source: de.wikipedia.org