Attractive real estate agents: the research and the hype

attractive real estate agentsIt is often said that beauty is in the eye of the beholder, but a recent research article has the blogosphere a buzz questioning how attractive real estate agents can help you sell your home. The article was even posted on a National Association of Realtors® blog (realtor.org); posing the question, “do attractive real estate agents sell homes for more money?”

Do attractive real estate agents help sell your home faster?

The research conducted by Salter, Mixon & King, and published in the journal Applied Financial Economics, was titled “Broker beauty and boon: a study of physical attractiveness and its effect on real estate brokers’ income and productivity” (2012. vol. 22(10): p.p. 811-825). The research was not just an attempt at pop psychology, but rather it was one of the more recent attempts to establish how physical attractiveness affects income. The authors suggest, as stated in the abstract, that, “Results suggest that beauty augments more attractive agents’ wages and that more attractive agents use beauty to supplement classic production-related characteristics, such as effort, intelligence, and organizational skills.”

As the article makes its rounds on the internet, the results have most likely become misinterpreted and distorted. Although headlines might suggest that attractive agents sell homes at higher prices than others, however, the results could be interpreted that attractive agents may actually charge you more for their services rather than selling your home at a higher price (after all, the research is how beauty affects earnings). Additionally, as some have suggested that the results indicate less attractive agents sell homes quicker, beauty does not guarantee a quick sale (or satisfaction, as I describe below).

Although beauty is in the eye of the beholder, Hamermesh & Biddle state that there is empirical evidence that “beholders view beauty similarly” (1994. Beauty and the labor market. The American Economic Review, 84(5), 1174-1174.). They also acknowledge that beauty may “alter” other characteristics – and these variables are difficult to measure. Some variables that may be part of the “beauty quotient” might include facial structure, height and weight, while other variables may also include a person’s self esteem and confidence. Although Hamermesh & Biddle make it clear that there is a “penalty” in earnings for unattractiveness, they also acknowledge there may be “unobserved” characteristics associated with attractiveness that could account for increased earnings (they suggest a possible example is that increased earnings in adulthood with appearing physically attractive may be a result of a privileged background).

Do attractive real estate agents help sell for more money?

selling housesThe phenomenon of increased earnings for the beautiful is not a new concept, but Salter, Mixon & King have indicated it is factual for real estate agents. But the attractiveness quotient is not clear cut as other factors (besides physical characteristics) are brought to the table, such as networking and communication skills, previous experiences, and professional image.

But wait- there’s more to the story! There is another body of research on contrast effects and physical attractiveness that suggests that when people are surrounded by beautiful people, happiness decreases (see: Michael Levine (2001). Why I hate Beauty. Psychology Today. 34,4). So, this could be interpreted to indicate that just because you hire an attractive real estate agent (quite possibly for a higher commission) – your satisfaction is not guaranteed.

Do attractive real estate agents make more commission?

The bottom line: stick with the basics when hiring a real estate agent; which include (among other things) asking trusted sources (such as friends and relatives) for a referral , and ask agent about their license and qualifications as well as recent references.

Original published at https://dankrell.com/blog/2012/04/18/beauty-attractiveness-and-real-estate-agents-the-research-and-the-hype/

By Dan Krell

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

Understanding the revision of home sale statistics

by Dan Krell
© 2011
DanKrell.com

As the housing market slid, the National Association of Realtors® (NAR) was often criticized for producing home sale data that seemed unrealistic. As criticism seemed to peek, NAR announced earlier this year that they were seeking to “re-benchmark” data for counting the number of homes that sold.

According to a December 13th Reuters report (Existing home sales to be revised down from 2007: NAR), the NAR is “revising down” home sales statistics because of double counting, “indicating a much weaker housing market than previously thought.” The news sparked cries of “fraud!’ and “told you so’s” across the blogosphere; while some used the news as a marketing opportunity to tout their data as unwavering.

However, according to the NAR’s press release, “Q&A on Re-Benchmarking of Home Sales” (economistsoutlook.blogs.realtor.org), the main reason for the re-benchmarking is for data drift that occurred during the housing downturn; re-benchmarking is a common aspect of estimating economic data (much like the government’s GDP and employment figure revisions). The re-benchmarking is only for existing home sales and not home prices.

According to Lawrence Yun, NAR Chief Economist, data drift is to blame for the over estimates. The monthly existing home sales data that is reported by NAR is compiled from MLS boards across the country. Data drift was revealed when comparisons were made with other available home sales data.

Data drift is a term that describes the change of non-constant variables used in statistical measurements. The data drift in NAR’s existing home sale data was described as being caused by several factors: an increasing reliance on Realtors®, double listings, and inconsistencies across MLS boards.

Although MLS data typically tracks Realtor® home sales data, there are homes that are also sold by home builders and for-sale-by owners (fsbo) which are not typically reflected in the MLS. Dr. Yun believes that some of the data drift is due to the increasing reliance on Realtors® as the market deteriorated to sell homes they typically did not sell in the past (by fsbo’s and builders).

Additionally, it was realized that MLS home sale data was duplicated in some instances. In some regions, it is not unusual for Realtors® to belong to more than one MLS board. In some of those instances, Realtors® often input the data in two or more MLS’s; thus resulting in a duplicate sales.

As technology and markets advance, local and regional MLS boards found themselves changing to increase the quality of the MLS data, as well as expanding to provide service in outlying areas. Although many MLS boards attempt to adhere to consistent data standards and practices, compiled home sale data is not always consistent across all the MLS boards. Additionally, as MLS coverage grew, it could have been logically assumed that the quantity of home sales reported for the growing MLS boards would increase because of the wider coverage.

Additionally, Dr. Yun stated that the census data used to benchmark the MLS data has also changed; the U.S. Census changed the data it collected by changing survey forms. In re-benchmarking, the NAR expects a revision of existing home sales to account for the increase of MLS entries of new homes as well as homes that sold multiple times within a 12-month period (flips). The re-benchmarking should also account for fsbo variances that were not previously adjusted.

The revisions are expected this week.

More news and articles on “the Blog”
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of December 19, 2011. Using this article without permission is a violation of copyright laws. Copyright © 2011 Dan Krell.

Downsizing is the new real estate trend

Looking to lower expenses, homeowners are looking to downsize

by Dan Krell, Realtor &copy 2009
www.DanKrell.com

When you think of downsizing, you might think of empty nesters trading down from a suburban home to a smaller, more convenient condo. The downsizing stereotype has long gone by the wayside as downsizing isn’t just for older adults; downsizing has become the focus of anyone wanting to pare down their expenses.

Looking for ways to save money in the current economy, many home owners are re-evaluating their expenses- including their mortgage. The rally cry of “bigger is better” is no longer heard from home buyers. Even home owners are discovering that “less is more;” the less the mortgage payment, the more cash they have at the end of the month for such items as savings, travel, or paying down debt.

The benefit of downsizing is not just the potential of lowering your monthly mortgage obligation; the property tax, maintenance and utility bills are typically scaled down along with the home. In order to gain the financial benefits of downsizing, finding the right home to meet your needs is important. When searching for your new home, considerations in size, style and location will not only affect your financial picture but your lifestyle as well.

Your first thought might be to look into condos because of the low maintenance and convenient living. Nevertheless, the low maintenance and convenient amenities come at a price in the form of a condo fee, which can sometimes negate the savings of downsizing. Additionally, downsizers often experience “size shock” due to the limited living area and scant storage that a condo offers.

Other downsizing options may include a townhome or a smaller single family home. You might find these options more appealing because there is no condo fee associated with this type of housing (although there may be a HOA fee). Even though you are seeking to reduce your “housing footprint,” these options seem roomier than most condos; however, these homes typically have higher maintenance and utility costs than a condo.

Another consideration of downsizing is that you will most likely have to downsize your possessions as well. The first step, as with any home sale, is to reduce your clutter. Going through all your items in storage and throughout your home to dispose, sell, or donate items that you do not use and will most likely not use. A widely accepted de-cluttering tip is to identify and discard items you have not used in a year or more. Items once thought of as collectibles and keepsakes may now seem just a token of a forgotten time. As you soon realize that items such as pieces of furniture, forgotten collections, and tacky beach gear won’t make the trip with you to your new home, you will most likely feel the ambivalence of holding on vs. freeing yourself from the past.

It is important for you to discuss downsizing with your financial adviser, accountant and/or financial planner to see how it fits into your larger financial picture. After looking at the numbers, you may realize that downsizing may not be for you because there may not be enough savings from downsizing, you may not be able to net enough from your sale, or you simply owe more on your mortgage than the value of your home.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of June 8, 2009. Copyright &copy 2009 Dan Krell.

Signs of Recovery or Anomalous Blips of Activity?

by Dan Krell
Google+

As President Bush officially proclaimed the month of June as National Home Ownership Month this year, many wondered about the future of the housing market. As the national media continues to portray the housing market as a financial black hole by telling stories of dread and dismay, it is a wonder if any of the industry initiatives have actually helped to stimulate the market. Generally the bad news is that the market continues to be slow; however the good news is there are signs of recovery.

National real estate sales numbers continue to slide, as reported by the National Association of Realtors (Realtor.org). The recent report indicated that home sales were down again for the month of April 2008 (as compared to sales from the same time the previous year). Additionally, the NAR reports that the national median home price for all types of housing fell to $202,300 (from $219,900 the same time a year ago).

However, the NAR reported positive news about localized markets, such as Greenville, SC and Springfield, MO, where strong home value increases are attributed to healthy local economies. Additionally, markets in areas such as San Diego, CA and Fort Meyers, FL have experienced increased home sales after significant price reductions, which is an indication that these localized markets have found their equilibrium.

Locally, there are micro markets rebounding as well. Sales statistics compiled and reported by the local MLS (Metropolitan Regional Information Systems, Inc.; MRIS.com) indicate that there are localized market increases even though Montgomery County, as a whole, continues to post decreased sales numbers. And even though the county average sales price has lowered to $575,513 (as reported by the Greater Capital Area Association of Realtors; GCAAR.com), sales statistics within specific zip codes (such as 20814, 20815, 20816, 20854, 20852, 20833, 20878, 20882) indicate increases in sales prices as compared to the same time last year. Some of these areas had slight sales price increases, while others had moderate gains; the average sale price for the zip code 20854 (Potomac, MD) increased over 30% in April 2008 as compared to the same time last year!

Along with these signs of recovery, a March 2008 announcement by the Office of Federal Housing Enterprise Oversight, Fannie Mae and Freddie Mac indicated that there will be an increase of $200B to increase the liquidity of the mortgage industry. Analysts explain that the liquidity will reduce restrictions on high loan-to-vale mortgage programs. Restrictions on these loans were imposed to minimize further losses to Fannie and Freddie after foreclosure related losses increased as the housing market declined.

As much of the secondary mortgage market has all but shriveled and died, the importance of Fannie Mae and Freddie Mac is now underscored. With an additional $200B, Fannie and Freddie have committed to increase the availability of low down payment mortgage programs that have been the center of home ownership programs for years.

While many housing and economic indicators are down, there are many signals that the economy as well as the housing market is seeking its equilibrium. While some economists feel these signs are anomalous, others remain optimistic that stronger economic growth in the second half of 2008 will assist in stabilizing the housing market.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of June 2, 2008. Copyright © 2008 Dan Krell.