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.

Do people really care about real estate agent ethics?

What factors do you consider when shopping for items or services? Is it price? Brand recognition? References? When it comes to hiring a real estate agent, if you’re like most people, chances are your choice is not necessarily based on the agent’s adherence to ethical standards.

Of course, high integrity and ethical behavior is admirable. However, what may seem counter intuitive to an ethical society, a body of research indicates that consumer choices are not typically based on ethical criteria. Of the many research articles published in peer reviewed journals, here is a very select few that point to such a conclusion.

First, a 2005 study seeking to determine if consumers buying decisions were based on companies’ ethics was conducted by De Pelsmacker, Driesen, & Rayp. They indicated that although there are numerous attitude surveys that reveal consumers actually value ethics in the marketplace, consumer behavior is not consistent. The study examined consumer’s willingness to pay for fair trade coffee (considered to be the “ethical” choice), and found that although 50% of the study sample were considered fair trade “lovers” or “likers,” only 10% of the study sample were willing to pay the premium for the ethical choice (Do consumers care about ethics? willingness to pay for fair-trade coffee. The Journal of Consumer Affairs, 39(2), 363-363-385.).

Not convinced? A 2001 study investigated whether consumers actually care about ethical behavior as well as whether good/ bad ethical behavior affects consumer choice. Carrigan & Attalla concluded that although consumers are increasingly sophisticated, consumer behavior doesn’t favor ethical companies or avoids those that are unethical. Additionally, the study found that a consumer’s knowledge of a company’s unethical behavior didn’t change buying behaviors nor did it contribute to actions against the unethical company. In addition to being cynical about ethics differentiation; consumers consider price, quality, and value more important than ethical criteria in consumer purchase behavior (The myth of the ethical consumer – do ethics matter in purchase behaviour? The Journal of Consumer Marketing, 18(7), 560-560-577.).

Although ethical criteria may not be necessarily used in when choosing a real estate agent, Neale & Fullerton found that consumers do perceive unethical behaviors as unacceptable. In their 2010 study, consumers rated ten of fourteen scenarios of questionable behaviors as being unacceptable (The international search for ethics norms: Which consumer behaviors do consumers consider (un)acceptable? The Journal of Services Marketing, 24(6), 476-476-486.).

Even though unethical behaviors may be considered unacceptable, reporting such behavior is a different story. Curtis, in his 2006 study found that although the seriousness of a breach of ethics would prompt a report, the decision to report unethical behavior is highly correlated to negative mood (e.g., anger, pain, etc) (Are audit-related ethical decisions dependent upon mood? Journal of Business Ethics, 68(2), 191-191-209.).

Rutledge, concluded in a 1994 paper that ethical issues are not always clear. Additionally, responses to such situations depend on personal principles and standards (Conflicts of interest or ‘thou shalt not steal’ revisited. Real Estate Issues, 19(3), 15-15.).

The research might suggest that consumers are not entirely impressed by an adherence to high ethical standards. Furthermore, even when ethical standards are breached, the offenders are not always reported. The research may point to an increasingly pragmatic view that real world ethics is a complex matter that is often determined by a person’s perception.

by Dan Krell
© 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.

The internet: a catalyst for change between real estate agents and their clients

Have you ever thought of how the internet has changed your personal relationships? Before the proliferation of social media on the internet, you may have related to your friends and family much differently than you do today. Whether you know it or not, your relationship with businesses has also changed; banking and shopping seem to be mostly initiated on the internet. And, of course, the internet has changed your relationship with your real estate agent.

Before public use of the internet was commonplace, real estate agents mostly met with their clients in person to review available home listings. Although many used the technology of the day (fax machine and telephone), a face-to-face meeting was still a necessity. As the internet flourished, early adaptations allowed real estate agents to correspond with clients via email (of course those who were sophisticated enough to have an email account).

As the internet evolved, so too did the business of real estate. And while surfing the internet became a regular daily routine (like your morning coffee); MLS services, Realtor® Associations, brokers and real estate agents all tried to capitalize on the latest technologies to capture business.

One could even try to make the argument that technology and the internet was an enabler of a real bubble that would eventually pop. Because house-hungry buyers wanted to be the first know about new listings and be able to present their offer before anyone else, internet applications were developed to adapt to that market need; internet applications were touted to automatically send listing alerts to buyers’ emails and cell phones. The increased use of mobile technologies such as texting and SMS, along with the ability to surf the internet on the cell phone allowed buyers to search homes anytime/anywhere. Tech savvy buyers could not only get notice of a new listing almost immediately, but they could also send an offer to the listing agent without ever leaving their chair!

Of course, many who hastily bought without inspections (or worse- sight unseen), realized that the internet was not a substitution for visiting the home and doing due diligence. The internet has since grown to become the leading source for real estate related information. What was once ballyhooed as the means of procuring clients is now realized as a tool to augment client relationships.

Certainly, the internet has not yet become the replacement for human interaction in real estate transactions. However, for better and worse, the maturing internet has impacted the relationship between the real estate agent and their client. Where at one time, the public solely relied on real estate agents for information; the public now relies on their real estate agent for specialized information and increased personal service. The business of real estate has shifted from selling the idea that real estate agents had the listings and all the related information, to not only selling personal and specialized services to facilitate the real estate transaction – but to assist the public in understanding the overwhelming barrage of data and information by providing meaningful interpretation and implementation.

Much like the effects to other financial industries, the internet has not totally replaced human interaction; but instead has changed relationships. At one time the internet was thought to become the virtual revolution; but in actuality has forced the real estate industry and agents to rethink their function and relationship with their clients.

by Dan Krell
© 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.

Realtors Unknowingly Practice Law

Do you expect your real estate agent to be the real estate legal expert and provide you with the best real estate legal advice on the sale or purchase of your home? If you do, you’re not alone. Even though licensed real estate agents in Maryland are required to take continuing education on new and/or changed real estate related legislation, the fact remains that providing legal advice goes beyond the scope of practice for a licensed real estate agent.

Consumers often ask about the scope of practice for a licensed real estate agent. After all, the agent facilitates real estate contracts as well as facing legal issues every day. Does a licensed real estate agent have the ability to advise clients on real estate legal matters? When should a real estate agent draw the line and tell their client to seek the advice of an attorney?

To be clear, a license to practice real estate is NOT a license to practice law (however, there are agents who are licensed attorneys). In fact, the Code of Maryland (09.11.05.03 ) offers guidance in supervising licensees indicating that “(C) Written procedures and policies which provide clear guidance in the following areas:(x) The unauthorized practice of law by a licensee;”

Additionally, Article 13 of the National Association of Realtors code of ethics states (Realtor.org), “REALTORS® shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.”

Given the strong positions of regulatory bodies, it should be clear that a real estate agent cannot act as a legal advisor or provide legal advice. Some lines are well defined and should not be crossed; however other lines are gray and sometimes confuse real estate agents and consumers alike as to the legal implications and consequences.

For example, some agents feel that it is necessary to alter a listing or sales contract to fit the needs of the transaction. Rather than having an attorney review the contract and make any necessary changes, some agents will eliminate or add wording to a contract on their own. This may sound harmless, however many agree that this can be the unauthorized practice of law.

Recent market trends provide this timely example: As many home owners are facing legal and financial challenges, some real estate agents are advising home owners to undergo the short sale process. Unfortunately, they do not consider the consequences as well as other available options. Again, many agree that giving such advice may be construed as the unauthorized practice of law.

Besides being resourceful and knowledgeable, real estate agents are trained to be experts in the marketing and selling of homes. Real estate agents are not attorneys nor should they pretend to act like one. In real estate transactions, sometimes the consequences to seemingly obvious solutions can turn into legal nightmares. So, don’t be offended the next time your real estate agent suggests you talk to your attorney; always consult your attorney whenever you seek guidance on your legal responsibilities to any real estate transaction.

Original published at https://dankrell.com/blog/2008/06/12/do-realtors-unknowingly-practice-law/

By Dan Krell
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This article is not intended to provide nor should it be relied upon for legal and financial advice. Copyright © 2008 Dan Krell.

Checking Up on Your Buyer Agent

by Dan Krell

Is your buyer agent showing you all the homes that match your search criteria? Let’s face it, there are presently thousands of homes listed for sale. You can’t realistically visit all the homes for sale, so how are you going to limit the homes you actually visit? If you rely solely on your buyer agent to show you homes that match your search criteria, you may be missing out on seeing other attractive and desirable homes. As most buyer agents act within their duties to their clients, some place their needs before their clients’; some buyer agents steer their clients for financial incentives and just plain convenience.

As some home sellers are offering financial incentives to home buyers, some are offering financial incentives to buyer agents in the form of bonuses and/or higher commissions. Additionally, some real estate brokerages offer financial incentives to their agents for selling intra-office listings in the form of bonuses. It’s easy to see that a buyer agent stands to make more money when they steer their clients to listings that either pay the highest commission and/or offer bonuses. If you ask your buyer agent, they will give you every detail of a home-except how much commission is paid and if there is a selling bonus offered (most agents do the right thing by disclosing selling bonuses to their clients when they submit an offer).

Additionally, some buyer agents look to show homes where the home seller can settle without delay. If there is any indication that it may be a prolonged settlement, the listing is excluded from the list provided to the home buyer. Typical reasons a home seller may need a prolonged settlement include finding a home of choice or requiring third party approval (which include short sale, probate, or bankruptcy sales). Some of these sales can take more than two months.

A small number of buyer agents are just plain lazy; they will only show you the homes that are convenient for them to show. Rather than making appointments and scheduling their time around their clients, some agents will only show vacant homes or homes that do not require any advanced notice. As many listed homes are occupied, some do require appointments or notice to show because of tenants, pets or infants.

As the real estate industry strives to be at the cutting edge of technology, information (albeit sometimes too much information) is available to everyone on the internet. To be certain you see all the homes that interest you, compare a search that you conducted to your agent’s search. One of the best ways to search for homes online is to go directly to the local MLS. HomesDataBase.com is the consumer website offered by Metropolitan Regional Information Systems, Inc. (the local MLS). This site provides up to date information as listings are updated daily. You can search for homes based on your criteria as well as email your buyer agent for additional information.

Vigilance may be too strong of a word, but your home purchase is one of the largest purchases you will make in your life. You must be aware and attentive to all aspects of the home buying process.

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 February 18, 2008. Copyright © 2008 Dan Krell.