The Impact of Real Estate Agent Specialization and Activity Level on Market Outcomes

Abstract

Real estate agents play a critical role in reducing transaction costs in home sales. The incentives they face and the effect they have on selling price and time on market have been shown to differ depending on the legal setting governing the contractual relationship between principal (home owner) and agent. Using 8 years of Multiple Listing Service (MLS) data from a large Midwestern city, we study a market where the large majority of transactions involve a listing agent working directly with the seller and a cooperating agent working directly with the buyer. We find that more active agents sell homes more quickly, but at a lower price. Important differences emerge when we separate agents’ roles into listing agents and selling agents. We find that recent market activity by listing agents leads to significantly lower sales prices and a quicker sale. An additional listing in the previous 60 days is associated with a 0.3% reduction in sales price and a 0.8-day decrease in days on market. More active selling agents are associated with fewer days on market, but with no apparent impact on price. Relative to less active agents, listing agents in the most active quintile are associated with an 8% lower transaction price and 14 fewer days on market.