The impact of real estate agents’ expertise on house prices and TOM

Abstract

This study investigates whether the expertise levels of real estate agents impact the fundamental market outcomes of transaction prices and marketing durations. A primary contribution of this article is joint examination of three knowledge categories for both listing and selling agents. Instead of the length of agents’ license periods or recent transaction volumes, the results demonstrate that the important expertise category is agents’ local market knowledge. We consistently find that the economically important determinant of transaction prices is the separation distances between the subject homes being traded and agents’ micromarkets where they have conducted recent transactions. The results further demonstrate that agents who have tighter market concentrations increase prices and vice versa for unfocused micromarkets. We find that agents’ expertise levels do not materially alter marketing durations.