Select Publications

Sex and Selling: Real Estate Agent Gender, Bargaining, House Price and Liquidity. Duong Pham, Geoffrey K. Turnbull and Bennie D. Waller. Journal of Real Estate Finance and Economics,

This paper uses a search model with Nash bargaining to identify various channels through which agent gender affects selling price and selling time in the resale market for houses. The theory is used in conjunction with the empirical model to infer agent bargaining power when dealing with the same or opposite sex agents on the other side of the transaction. The results reveal that sellers set higher listing prices when working with male agents, a pattern consistent with sellers’ ex ante beliefs that male agents enjoy greater expected bargaining power. Ex post agent bargaining power varies by sex and their role in the transaction. Female agents assisting buyers have stronger bargaining power when facing male listing agents than when facing female agents in rising or falling markets. The ex post bargaining power of male selling agents assisting buyers appears to be generally weaker than that of female listing agents.

Why Disclose Less Information? Toward Resolving a Disclosure Puzzle in the Housing Market. Xun Bian, Justin Contat, Bennie D. Waller and Scott A. Wentland. R&R at Journal of Finance Real Estate and Economics.

We examine the role of information disclosure in the housing market, offering both theory and evidence for observed variability in disclosure strategies among property listings in a multiple listing service (MLS). Our initial empirical findings and the theoretical literature suggest a positive link between information disclosure (e.g., number of photos) and marketing outcomes (e.g., sale price, liquidity). While intuitive, it raises an interesting puzzle: why then do some agents disclose less information? Analytically, we show that it can be optimal to omit information in some circumstances, particularly when homes are more heterogeneous or have greater scope for taste-specific attributes. Empirically, the data support the prediction that less information disclosure is beneficial for a large subsample of properties (i.e., high-end homes). Our results also reveal scope for new principal-agent issues, as agents generally disclose less when they market their own homes, and even less for their higher-end homes when it is a more optimal strategy.

Mitigating Agency Costs in the Housing Markets. Geoffrey K. Turnbull, Bennie D. Waller and Scott A. Wentland. R&R at Real Estate Economics

Information asymmetries and incentive misalignments in housing markets are well-documented, as the homeowner-listing agent relationship often serves as a textbook example of the principal-agent problem. Yet, until recently, little research has studied what actually mitigates agency costs in these markets. Motivated by this, we investigate two mechanisms that plausibly curtail agency problems: agent education/training and the monetary incentive structure of salespersons and brokers. Using detailed real estate microdata from a decade of home transactions, we find that differences in compensation structures across brokers can effectively eliminate agency costs. The empirical evidence is consistent with managers/partners of a brokerage (principal brokers) having stronger monetary incentives to internalize potential reputational spillovers for their brokerage offices. We observe this result both cross-sectionally across agents and when employing a difference-in-difference (“within agent”) approach, using the timing of their incentive changes for identification. Where local reputational incentives are most instrumental, we find the clearest evidence of agency cost mitigation among principal brokers of non-franchise, locally-owned brokerages.

Foreclosure Externalities and Home Liquidity.  Xun Bian, Raymond T. Brastow, Bennie D. Waller and Scott A. Wentland.  Real Estate Economics, forthcoming.

We study the external impact of foreclosures, exploring how foreclosed properties affect the liquidity of nearby homes. Empirically, we find a foreclosure increases a nearby home’s time‐on‐market by approximately 30% on average, which is primarily driven by a disamenity effect. There is evidence that this delay comes from surprises or information shocks to nearby sellers, as foreclosures that come on and/or leave the market after a nearby home’s listing date have the largest adverse liquidity effects. However, when there is no surprise and a nearby foreclosure remains through the entire marketing period, sellers discount list prices more steeply, effectively counteracting these liquidity effects. The results suggest that information, pricing and expectations play key roles in how this externality is absorbed by the real estate market.

Properties that transact at/or above listing price:  Better broker, strategic pricing or just dumb luck? Geoffrey K. Turnbull, Bennie D. Waller and Velma Zahirovic-Herbert.  Journal of Real Estate Finance and Economics, 60, 53–76, 2020.

A surprisingly large number of houses sell above listing prices in a wide range of markets and in all market conditions. The question is: why do some houses sell above listing price while neighboring similar houses do not? Is it that sellers misprice the property at the outset, work with real estate brokers who are particularly skilled at bringing in high value buyers, or are simply lucky to have high value buyers show up during the marketing period? This paper makes two contributions. It offers an empirical framework to isolate seller and agent influences on the likelihood of selling above listing price. It also offers empirical evidence about the seller, agent and market determinants of sales above list across all market phases. Sellers who do not follow their agent’s guidance and under-price their property increase the likelihood of selling above list. Agent experience also increases the likelihood. We also identify specific marketing strategies and agent incentives that do and do not appear influence the likelihood of selling above listing price once the other seller behavior, agent characteristics, and market conditions are taken into account.

Restrictions versus Amenities: The Differential Impact of Home Owners Associations on Property Marketability.  Kimberly Goodwin, Claire Reeves LaRoche and Bennie D Waller.   Journal of Property Research. forthcoming

Common-interest developments (CIDs) or planned urban developments (PUDs) can include a multitude of property types such as condos, townhomes, coops, and single-family residences. Many such developments are privately governed by a homeowners’ association (HOA) and managed by an HOA board of directors comprised of community homeowners. While such communities and their governing bodies have been widely criticized for their onerous rules, regulations and exclusionary practices, many argue that the amenities, benefits and utility afforded to its members provide a large degree of satisfaction for homeowners. In fact, one of the purposes of an HOA is to preserve and enhance home values by creating an environment with minimal negative externalities. Although it is generally assumed that an HOA does add value, these associations have also generated a number of controversial disputes. This paper examines the effects of an HOA on marketability to empirically shed light on the question of whether buyers find HOAs to be beneficial or burdensome. The results show that the impact of the HOA on price, marketing time, and probability of sale are not even across price segments and exist even after controlling for the presence of gated communities.

Are Home Warranties Worth It?  A Study in the Richmond Housing Market. Justin Contat and Bennie Waller.  Journal of Housing Research, forthcoming.

We are the first to show that home warranties are beneficial by providing a valuable form of insurance to home buyers which home sellers then (partially) extract in the form of price premiums and faster sales. The benefits of offering a home warranty differ among homes, with older homes tending to receive larger price premiums and lower-priced homes tending to receive larger reductions in time on market. For the average home in our data that is priced at $236,000 and 28 years old, offering a home warranty is associated with a price premium of at least $4,000 and a reduction in time on market of at least 2.5 days. Additionally we find some evidence of principal-agent conflicts in the home warranty market.

(What) do top performing real estate agents deliver for their clients? Geoffrey K. Turnbull and Bennie D. Waller. Journal of Housing Economics, 2018, 41, 142-152.

Existing evidence indicates that larger listing inventories thin agent effort dedicated to each individual client. This study examines whether shopping externalities or other scale effects offset this inventory externality for agents with the largest market presence. Data from Central Virginia shows that agents holding the greatest percentage of listings in the housing market obtain higher prices and sell listing faster than other agents. This pattern is consistent with the notion that top tier listing agents are able to exploit their market presence to generate meaningful positive shopping externality effects for individual clients. Propensity scoring models provide evidence that the performance advantage of these agents is not driven by differences in the types of houses they represent, but reflects agent productivity. On the other hand, top tier agents in terms of sales do not consistently obtain higher prices or shorter selling times for their listing clients. The shopping externalities associated with top tier listing agents do not appear to extend to top tier selling agents

Who Benefits from Targeted Property Tax Relief: Evidence from Virginia Elections? Jeremy G. Moulton, Bennie D. Waller and Scott A. Wentland. Journal of Policy Analysis and Management, 2018, 37:2, 240-264.

This study examines the market impact of targeted property tax relief, which is critical for understanding who exactly benefits from a widely used local policy. Specifically, we investigate this in the context of two statewide ballot measures in Virginia that provided property tax relief or heightened expectations for future relief intended to aid disabled veterans and seniors, respectively. Using residential multiple listing service microdata from Virginia, results from a regression discontinuity analysis show that once the 2010 tax relief measures passed on Election Day, property values rose sharply in response to the sudden increase in demand for home ownership among the targeted groups. We find that senior preferred housing and properties within areas with higher proportions of seniors and veterans experienced the highest price appreciation, while areas with fewer veterans or seniors saw little impact. The findings suggest that this type of policy provides an immediate benefit to current homeowners, thereby offsetting benefits for subsequent homeowners within the targeted groups. This effect represents an unintended consequence of targeted property tax relief as a policy tool more generally, as immediate capitalization into home prices subsequently increases the cost of housing for many individuals the relief was intended to help.

Dynamic Spatial Externalities and Real Estate Liquidity, Ray Brastow, Bennie D. Waller and Scott Wentland.  Journal of Real Estate Research, 2018, 40:2, 199-240.

In this paper, we reexamine a known disamenity to glean new insights into neighborhood spillovers. Employing a survival analysis and a difference-in-difference framework, we find that registered sex offenders have a large adverse impact on nearby home liquidity on average; and, this effect is largely driven by ‘‘surprises’’of their moving in or out during the marketing period of nearby homes. However, for homes near offenders who reside nearby through the entire marketing period, sellers tend to steeply discount the initial list price and may actually sell their homes more quickly. These cases ultimately lead to lower sale prices for nearby properties on average, while the sale price effects are nosier for the surprise or temporally dynamic cases, providing initial evidence that more dynamic externalities manifest primarily in the liquidity of nearby homes.

Connotation and Textual Analysis in Real Estate Listings.  Kimberly Goodwin, Bennie D. Waller and Shelton H. Weeks.  Journal of Housing Research, 2019,27:2, 93-106.

Real estate listings typically include both objective, factual information about property characteristics along with subjective, descriptive language. How the agent constructs the content of the listing can either encourage or discourage potential buyers from viewing a property. Thus, understanding how buyers are interpreting the language in the listing is essential for effective marketing. This study takes an important first step towards creating a real estate specific dictionary of descriptive terms and measure of favorability.

This Old House: Historical Restoration as a Neighborhood Amenity. Geoffrey K. Turnbull, Bennie D. Waller, Scott A. Wentland, Walter R. Witschey and Velma Zahirovic-Herbert. Land Economics, 2019, 95:2.

This study examines the impact of the proximity of properties that have been salvaged through the use of historical rehabilitative tax credits (RTC).  More specifically, this study examines the marketing outcomes of neighboring properties relative to RTC properties that have been renovated in terms of selling price, liquidity and probability of sale.   Preliminary results suggest that properties in near proximity to RTC properties sell for nearly a 6% price premium but do remain on the market slightly longer. Results also suggest that as the number of RTC properties increase within a two-mile proximity significantly increases the probability of a successful transaction (i.e. increased probability of sale).

Commission Splits in Real Estate Transactions: An Agency Problem? Xun Bian, Bennie D. Waller and Abdullah Yavas.  Journal of Real Estate Finance and Economics, 2015, 1-23.

We examine the commission splits between listing and selling agents in real estate transactions by constructing a theoretical model to show that agency problems arise when a listing agent attempts to maximize his or her payoff when setting the commission split.  Empirical results indicate that commission splits offered are lower for properties with higher listing prices, quick sales, and are higher for overpriced properties. In addition, agent-owned properties pay higher commission splits.

How Many Listings Are Too Many? Agent Listing Inventory and Sales Performance. Xun Bian, Geoffrey K. Turnbull, Bennie D. Waller and Scott Wentland. Journal of Housing Economics, 2015, 28, 130-143.

This paper examines how agent listing inventory affects the marketing outcomes of individual client properties. The results show that an increase of agent inventory by nine additional listings increases time on market by 14%.  A richer inventory measure taking into account the relative location of inventory yields a 26% effect on time on market.  The results indicate that agent incentives to secure additional contracts diverts selling effort from existing inventory, resulting in longer time on market for all properties.

The Role of Transaction Costs in Impeding Market Exchange in Real Estate.
Xun Bian, Bennie D. Waller and Scott A. Wentland.  Journal of Housing Research, 2016, 25.2: 115-135.

We examine the role transaction costs play, particularly the costs related to search and bargaining, in impeding or delaying real estate market transactions. In a theoretical model, we show that agents’ incentives are influenced by transaction costs in a way that will increase a home’s marketing duration and decrease the probability a home will sell. Buyers and sellers usually consider closing costs, agent commissions, and a variety of other monetary costs as the primary costs associated with buying/selling a home. Yet, these are not the only costs that stand in the way of buyers and sellers from making a mutually beneficial exchange. It turns out that agent incentives may be an overlooked consideration that has a substantial impact on these transaction outcomes. Specifically, we find that factors contributing to agents’ search (i.e. distance to the listing agent’s office and whether a property is “rural”) and bargaining costs (i.e. whether the property is agent owned) increase a home’s marketing duration and decrease the probability that it will sell. These factors stand as a significant impediment to market exchange in real estate, underscoring the importance of transaction cost as critical starting point for understanding (in)efficiencies in this market.

“Not in My Backyard”:The Effect of Substance Abuse Treatment Centers on Property Values.  Claire Reeves LaRoche, Bennie D. Waller and Scott A. Wentland.  Journal of Sustainable Real Estate.

Residential treatment centers offer the most intense form of treatment for substance abuse and are often embedded into residential neighborhoods to offer clients a more conventional living experience.  The purpose of this paper is to examine the external effect of residential rehab centers on nearby real estate. As addiction treatment centers are planned, a common response of nearby property owners is “not in my backyard” (NIMBY), as residents may perceive recovering (and potentially relapsing) addicts as presenting a heightened crime risk. Empirically, we find that a neighboring treatment center is associated with an 8% reduction in nearby home prices, and that this discount is magnified for treatment centers that specifically treat opiate addiction (as much as 17%).

Seller Over-Pricing and Listing Contract Length: The Effects of Endogenous Listing Contracts on Housing Markets.  Randy Anderson, Ray Brastow, Geoffrey Turnbull and Bennie D. Waller, Journal of Real Estate Finance and Economics, 2013, 1-17.

This paper examines how seller pricing decisions influence listing contract length and how these decisions affect price and duration in housing markets. Because list price affects broker effort required to sell the property, brokers respond to seller overpricing by increasing the length of listing contract. At the same time, sellers respond to longer listing contracts by adjusting their pricing strategy. Both affect broker sales effort, hence marketing outcomes. House transaction data from Virginia indicate that greater over-pricing by sellers prompts brokers to pursue longer listing contracts, which subsequently lengthen marketing time but increases selling price. The results reveal a novel transmission mechanism from higher list price (which induces longer contracts) to selling price and liquidity.

Dual Agency Representation: Incentive Conflicts or Efficiencies? Ray Brastow and Bennie D. Waller. Journal of Real Estate Research, 2013, 35:2, 199-222.

This study examines the impact of dual agency on selling price and market liquidity (time on market) relative to the timing of the transaction.  Overall properties that sell in a dual agency transaction sell for significantly less and endure longer marketing duration regardless of the timing of the transaction.  However, those properties that transact quickly after listing do sell for significantly higher prices appearing to benefit from transactional and informational efficiencies associated with dual agency.  Whereas properties that transact near the end of the listing contract sell for significantly less which may be indicative of principal/agent conflict.

Two Sides of Dual Agency:  Evidence from Homebuyers and Transactions.  Jon Wiley, Bennie D. Waller and Ray Brastow, Journal of Property Research, 2013, 30:1.

This study gains insights to the motivating causes of dual agency transactions in residential real estate by examining two distinct sources of data. The first is evidence from the NAR homebuyers’ survey; the second is MLS  data.  Results suggest that certain factors contribute to both the likelihood that a buyer will be unrepresented and the incidence of dual agency. The matching of results from the empirical analysis using the MLS transaction data and the NAR homebuyer survey data adds confirmation to our findings. Even as dual agency creates opportunities for efficiency gain, the empirical results have implications for the consequences of homebuyer involvement in the initiation of dual agency, strategic behavior recommendations for brokers as well as the possibility to policy adjustments.

Estimating the Effect of Crime Risk on Property Values and Time on Market: Evidence from Megan’s Law in Virginia.  Scott Wentland, Bennie D. Waller and Ray Brastow. Real Estate Economics 2014, 42:1.

This study finds that registered sex offenders residing nearby substantially reduce a home’s price and liquidity. These results are consistent with the notion that residents of central Virginia are aware of and utilize information available in online sex offender registries, made possible by Megan’s Law, to evaluate perceived crime risk when making decisions regarding real estate. We estimate that a sex offender residence located within 0.1 mile lowers a nearby home’s price by approximately 7% and substantially lengthens its time on market by as much as 80%. In addition, we estimate reverse treatments, finding that home prices are not significantly different just prior to a sex offender’s arrival and prices rebound after sex offenders move out, providing evidence that the cross-sectional approach produces properly identified causal estimates.

The Impact of Agent Experience on the Real Estate Transaction.  Bennie D. Waller and Ali Jubran, Journal of Housing Research, 2012, 21:1.

This research examines the marketing outcomes of real estate agents who acquire and maintain their real estate salesperson’s license for two years or less (rookie) relative to agents who have been licensed agents for 10 years or more (veteran). The findings show that properties listed by rookie agents will sell for approximately 10% less than those listed by more experienced agents and remain on the market significantly longer than those of more experienced agents. Properties listed by veteran agents sell for approximately 2% more and did so 32% faster.

The Impact of Broker Vernacular on Property Marketing Outcomes.  Kimberly R. Goodwin, Bennie D. Waller and Shelton Weeks. Journal of Housing Research, 2014, 23:2, 143-161.

This study examines the use of broker terminology in MLS listings and its impact on property sales.  The results presented in this paper provide evidence that what the broker writes in the MLS listing does matter and provides strong support for the value creation hypothesis.  While potential buyers are likely to discount what is perceived to be over-exaggeration and hype, for the most part deliberate and careful construction of the MLS listing can result in positive marketing outcomes (higher selling price, shorter time on market, and higher probability of sale). Furthermore, it is apparent that brokers do convey meaningful information to each other privately through the MLS.

Client Externality of Agents Selling Their Own Properties. Xun Bian, Geoffrey K. Turnbull and Bennie D. Waller.  Journal of Real Estate Finance and Economics, 2015, 1-26.

This study examines the impact of the marketing outcomes of a client property when in direct competition with their listing agent’s concurrently marketed property.  Results indicate that such properties sell for approximately 2% less than client properties listed with agents with no such conflict and endure up to a 70% longer marketing duration.