I am trying to sell my house at the moment in a particularly hot local housing market. The market isn’t the only thing that is hot. So is my agent. It turns out that her attractiveness could be very good news in terms of the price the house is sold for, but bad news in terms of how long it is on the market.
Research published last month finds that the personal characteristics of real estate agents matter to house prices and the length of time a house is on the market, even after controlling for the quality of the house.
In their analysis the researchers control for age of the property, size of the house, number of bedrooms, number of bathrooms, location of the home and, as controls for quality, whether or not the house has hardwood flooring, brick siding and granite countertops.
It turns out having a male agent is bad for the selling price of a house. Both male listing agents (those acting on behalf of the seller) and male selling agents (those acting on behalf of the buyer) are associated with lower house prices than their female counterparts. The gender of the agent, however, has no effect on how long a house is on the market.
Being attractive, for both listing and selling agents, is associated with higher final sale price for a house, with the effect on house prices of having an attractive listing agent is about twice as large as that of an attractive selling agent.
Where homeowners lose out on having an attractive listing agent, however, is in having their house on the market for longer. The attractiveness of the selling agent has no effect on length of time on the market (which makes sense since, presumably, the characteristics of the buyer’s agent only matter when the house is finally sold).
Attractive agents don’t necessarily earn more annually than less attractive agents. The houses they sell go for a higher price, but they sell fewer houses than do less attractive agents (presumably because each house is on the market for longer).
The study also finds that non-white listing agents are associated with lower final prices and both non-white listing agents and selling agents are associated with longer times on the market.
The authors argue that this evidence of higher house prices and longer time on market for attractive agents is suggestive of two theories. Either attractive agents use their physical beauty to compensate for low productivity (i.e., they don’t actually work that hard to sell the house because their attractiveness helps get a higher price). Or they use their beauty to attract better listings that command higher prices but are no better (or worse) at selling them than other agents.
The authors of this paper side with the second explanation – that agents don’t actually use their beauty to sell properties more successfully, but rather are better at attracting listings that they can sell for higher prices.
If my agent read this piece I suspect that she would think to herself: I wonder if anyone has every done a study on the relationship between having an economist as a client and the length of time a house spends on the market? I have to admit to feeling a bit badly about how analytical I have been about the whole thing. The good news is, though, that the combination of being patient (which I am) and being attractive (which she is) appears to be a winner. Here’s hoping!
Sean P. Salter, Franklin G. Mixon Jr & Ernest W. King (2012). “Broker beauty and boon: a study of physical attractiveness and its effect on real estate brokers’ income and productivity.” Applied Financial Economics, vol. 22(10): p.p. 811-825