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April 18, 2012September 22, 2018

Attractive real estate agents: the research and the hype

It 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?

The 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

February 24, 2011July 25, 2019

Can you depend on your real estate agent?

The trite idiom, “what you don’t know won’t hurt you,” is not the catch phrase you want your real estate agent to embrace. However, home buyers and sellers are often confronted with issues that often fall into this category, but should not prevent you from asking for more information or consulting with your attorney. Some common top red flag situations include guidance regarding contracts and addenda, having an agent insist you hire their vendor, and receiving an offer to purchase with conflicting information.

Although it is recommended that a home buyer and seller consult with their attorney to explain a listing or sales contract as well as addenda, the reality is consumers often rely on their agent’s understanding and explanation of the forms they sign. An example of this is the first time Maryland home buyer addendum. Besides the fact that a first time Maryland home buyers have their portion of the state transfer tax paid by the seller, the Annotated Code of Maryland (14-104 (c) – Real Property) states that the recordation and local transfer tax is to be paid by the seller unless both parties agree to a different arrangement. Even though section 14-104 (c) is clearly stated on the first time Maryland homebuyer addendum, I am increasingly hearing how some first time home buyers were not made aware of this opportunity. One home buyer recently told me they fired their agent because after reading the addendum to their agent, the agent told the buyer that transfer taxes are automatically split between buyer and seller regardless. Although it may have been true that first time Maryland home buyers often waived this opportunity during a seller’s market, it is increasingly being asserted in today’s buyer’s market.

Another red flag situation is when an agent insists a home buyer use a specific provider. For example, it is not uncommon for some buyer agents to compel their clients to hire a home inspector they use on a regular basis; the agent wants to ensure that the deal will not be jeopardized by an inspector pointing out too many concerns. I have heard home owners regretting having hired their agents’ home inspector without an interview or checking into their credentials, because of issues that turn up after closing. Additionally, some home inspectors will recount stories of how they have been pressured by buyer agents to not report items on the home inspection report so as not to “kill” the deal.

For home sellers, a red flag situation arises when they receive a purchase offer with inconsistent terms. Listing agents are often given offers that have inconsistent information, such as deposit checks amounts that conflict with the contract, or loan approval letters that are written for less than the purchase price. Sometimes, after digging a little deeper, is not uncommon to find out that the lender is not licensed to do business in Maryland, or the deposit check bounced. Without the proper information, the seller cannot make a solid decision.

Although you might think your real estate agent should be looking out for you best interest, intentionally or unintentionally- it is not always the case. Although, seemingly innocent or harmless situations can sometimes raise a red flag in your mind, most resolve without issue; however, it should not prevent you from asking for additional information, clarification, asking for credentials, and/or a consultation with your attorney.

By Dan Krell
Copyright © 2011

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.

February 9, 2011July 18, 2019

Does your agent have a duty to you – or their pocketbook during an open house?

I received an email from my local association indicating that there is a revised disclosure form. This is not unusual, as forms are often revised for various reasons. Often times, new forms or revisions to existing forms are often made when there are changes to real estate laws and practice thereof; or when issues arise in specific practice areas (either because of a significant lawsuit or someone received too many complaints). This time, however, the Maryland Real Estate Commission (MREC) most likely updated and clarified the agency relationship form “Understanding Whom Real Estate Agents Represent” because of complaints of agents’ behaviors (regarding their agency relationship) while conducting open houses.

The purpose of these “agency” forms are to protect consumers as well as inform of an agent’s and broker’s duty to their client. I’m not an attorney, however, I believe that the agency disclosure also provides the agent a reminder of their duty. To be fair, many brokers and agents understand their duties and their commitment to their clients. However, there are some that do not; and unfortunately, I cannot say that they know who they are.

An “agency relationship” is defined by COMAR (Title 17 – Real Estate Brokers) §17-528 as a “relationship in which a licensee acts for or represents another person with the person’s authority in a residential real estate transaction.” Further, §17-530 states; “A licensee who participates in a residential real estate transaction as a seller’s agent, buyer’s agent, or as a cooperating agent shall disclose in writing that the licensee represents the seller or lessor or the buyer or lessee.”

It appears that there are reports of agents who conduct open houses for the purpose of steering buyers their way by making disparaging remarks about the home, as well as exhibiting other subtle behaviors that may be construed as inappropriate. An explanatory letter from the MREC describes such behaviors and clarifies how agents should conduct themselves during an open house. Besides reports of agents sitting with their laptops at the ready to show buyers other homes; according to the letter, some agents have openly admitted that their goal was to recruit home buyers while sitting an open house for a listing agent. According to the MREC, this can be a violation of the agent’s duty of loyalty to the seller; “any agent affiliated with the listing broker who holds an open house is there exclusively as the seller’s agent.”

To further clarify the agency relationship, the revised “Understand Whom Agents Represent” form states “If you are viewing a property listed by the company with whom the agent accompanying you is affiliated, and you have not signed a ‘Consent for Dual Agency’ form, that agent is representing the seller.” To attempt to circumvent this issue, some agents have had their seller clients sign a waiver of agency for open houses. However, the MREC makes it clear that an “agency waiver” is prohibited under Maryland law.

The MREC states that although it is improper to solicit a buyer while sitting in an open house, it is acceptable for agents who conducted the open house for a listing agent to contact those unrepresented home buyers another time and place. The MREC website (www.dllr.state.md.us/license/mrec) provides additional consumer real estate related information, including agency relationships.

By Dan Krell
Copyright © 2011

Comments are welcome. 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.

January 26, 2011July 25, 2019

Evolution of real estate agent business models

When comparing real estate services, it is sometimes difficult to understand operational differences that could impact your transaction. Although the basics of selling real estate have not changed much over the years, the manner of delivery has changed. To understand how an agent’s business model may differ from another’s, let’s look at how several models developed.

Although real estate cycles, technology, and laws have contributed to the evolution of the real estate agent and how they deliver service, the “traditional” real estate agent is still around. The traditional real estate agent typically works solo, focusing on personal service rather than selling a high volume of homes. Since the agent is a solo practitioner, direct access to the agent is expected when issues arise in your transaction. The individual agent has their strengths and weaknesses; their experience and talent can be the difference in any transaction.

In past market surges, many agents found that their time was being stretched thin. To take advantage of the business environment, some agents felt that leveraging their time by hiring an assistant could grow their business. The idea was that the agent could spend more face to face time with clients and potential clients; while the assistant would deal with lower level functions, such as answering the phone and advertising.

Some assistants were licensed agents, so they could work directly with clients by showing homes and writing offers when it was necessary. As the market expanded, real estate assistants were spending more face-to-face time with clients as the lead agent was once again stretched for time. Agents keen on expanding their business, found that they could leverage even more time if they hired more licensed assistants to form a real estate team.

Although the “team” approach became popular about the time when buyer agency was introduced, it did not reach its peak until the boom market in the early to mid 2000’s. Initially, real estate teams were loosely comprised of a lead agent and several buyer agents (and sometimes an unlicensed assistant). The lead agent was focused on face-to-face time with home sellers, while feeding buyer leads to the buyer agents on the team (and of course retaining a part of the buyer agent’s commission). There is no coincidence that the peak of the housing market and this type of team structure coincided. As buyers became scarce, many of these teams contracted until (in many cases) the lead agent reverted once again became a solo practitioner.

To achieve an even higher volume of business, the team approach evolved further to a corporate or bureaucratic structure where licensed agents were hired to deal with specific tasks of the business or transaction (for example, one person would coordinate home inspections, another would coordinate contracts, etc). Various forms of this structure are still used today. The lead agent typically lends their name to the sale while team members conduct the day to day business of interacting with clients.

Like real estate agents, agent business models are not the same; and like individual agents, each real estate team has its own personality. Each model has pros and cons. The most touted benefit of working with a real estate team is that you have the team’s combined experience at your disposal. Conversely, a solo practitioner provides direct communication and typically excels in local real estate knowledge.

By Dan Krell
Copyright © 2011

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.