Journal of Advances in Economics and Finance

The Effect of Agent Inventory Holdings on Residential Real Estate Transactions

Download PDF (229.7 KB) PP. 213 - 220 Pub. Date: November 7, 2017

DOI: 10.22606/jaef.2017.24001

Author(s)

Jason Beck
Department of Economics, Armstrong State Unviersity, Savannah, Georgia, United States
David Hoover
Georgia Ports Authority, Savannah, Georgia, United States
Michael Toma^*
Department of Economics, Armstrong State Unviersity, Savannah, Georgia, United States

Abstract

This study uses an OLS hedonic pricing model to compare 94 months of Multiple Listing Service (MLS) listings in Chatham County, Georgia with heterogeneous housing characteristics. Controlling for other factors, this study estimates the effect of listing real estate agents’ inventory holdings (number of open listings at time of sale) on the sale price of a house sold via the MLS. Results indicate that agents holding greater levels of inventory result in up to a nearly 6% lower sale price relative to agents with only a few listings. This finding could be considered consistent with the hypothesis of a potential principal-agent problem in the real estate brokerage market whereby agents encourage their clients to accept sub-optimal prices in order to increase total commission income.

Keywords

Real estate, realtors, housing prices, hedonic real estate model.

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