The Impact of Broker Vernacular in Residential Real Estate

By Goodwin, Kimberly R.; Waller, Bennie D. et al. | Journal of Housing Research, July 1, 2014 | Go to article overview

The Impact of Broker Vernacular in Residential Real Estate


Goodwin, Kimberly R., Waller, Bennie D., Weeks, H. Shelton, Journal of Housing Research


Abstract

Real estate brokers develop their own sense of style and methods for entering listings into the MLS. Anecdotally, they may have their own take on what works and what does not, but there is very little evidence to support those theories. In this study, we examine the use of broker vernacular in the multiple listing service (MLS) listing and its impact on selling price, time on market, and probability of sale. What the broker promotes in the MLS listing impacts marketing outcomes. Careful construction of property descriptions can improve listing performance. Additionally, brokers convey meaningful information to each other privately through the MLS.

(ProQuest: ... denotes formulae omitted.)

The examination of comments of real estate brokers or agents in the multiple listing service (MLS) from any area reveals that real estate brokers exercise varying levels of diligence when constructing listings. Some listings feature well developed property descriptions augmented with photos or virtual tours of the property that effectively communicate to potential buyers and their agents the property's characteristics and seller's motivation. Such listings maximize the probability of a favorable outcome for the seller, a transaction completed in a timely manner at or above the market value for the property. Other listings are constructed in a manner that results in a reduced level of effectiveness. These listings can be characterized by inaccuracies, omissions, or the inclusion of superfluous information. The problems in these listings likely have significant negative impacts on the marketing efforts for individual properties.

A fundamental part of the listing construction process is the broker's description of the property. The description of the property will be examined by potential buyers and their agents as they attempt to identify the property that best fits their needs. The vernacular employed by the broker may determine if a property is dropped from consideration or is advanced in the search process by a particular buyer. As a result, broker vernacular and its impact on marketing outcomes in residential property markets are worthy of careful investigation.

In this study, we utilize multiple listing service (MLS) data to examine the impact of broker vernacular on marketing efforts for residential real estate. Specifically, we analyze the relationship between broker vernacular and selling price, marketing time, and probability of sale. Additional tests are used to determine if the conveyance of private information to other brokers via the MLS significantly impacts marketing outcomes. The findings indicate that broker vernacular impacts marketing outcomes and provide implications for broker behavior with respect to listing construction.

The paper is organized in the following manner. In the following section, we provide an overview of the relevant literature. In the next section, we describe the data set examined in the study and the steps followed to prepare it for testing. In the Methodology section, we present the model employed in the study, assumptions with respect to the underlying distribution, and our hypotheses. We discuss the findings in the Results section. In the Conclusion, we summarize the paper and provide guidance for listing construction.

Literature Review

The body of literature reporting the mechanics of a successful real estate marketing effort is significant. The factors considered in these studies include commission (Miceli, 1991; Yavas, 1996), dual agency (Evans and Kolbe, 2005; Gardiner, Heisler, Kallberg, and Liu, 2007), list price manipulation (Yavas and Yang, 1995; Knight, 2002), agent's geographic specialization (Turnbull and Dombrow, 2007; Brastow, Springer, and Waller, 2012), limited service contracts (Benefield, Pyles, and Gleason, 2011; Goodwin, Johnson, and Zumpano, 2012), listing contract type (Rutherford, Springer, and Yavas, 2001), neighborhood (Zahirovic-Herbert and Chatterjee, 2011), and sustainability efforts (Hoen et ah, 2011; Aroul and Hansz, 2012; Dumm, Sirmans, and Smersh, 2012) just to mention a few. …

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