This paper seeks to empirically determine whether more skilled and productive real estate salespeople, identified as full-payout or 100% commission agents, have a discernable, systematic effect on property selling price and its marketing time. Two types of agents, 100%ers and split-commission agents, are identified and controlled for in hedonic pricing and duration models in order to examine the relationship between incentives and agent performance. The results reveal that 100% agents sell their listed properties faster and at premiums. This paper may also help explain the contradictory findings of earlier research. An extensive body of literature has developed on the market for real estate brokerage services. Much of this research has focused on the impact of broker intermediation on selling price and duration. Jud (1983), Jud and Frew (1986), Jud, Seaks, and Winkler (1996), Zumpano, Elder, and Baryla (1996), Elderi Zumpano, and Baryla (1999, 2000), Rutherford, Springer, and Yavas (2005), Huang and Rutherford (2007), Rutherford, Springer, and Yavas (2007), and Tumbull and Dombrow (2007) form a representative sample of these works. To date, however, most of this research has assumed no differences in agent skill levels. More recently, it has been claimed by some researchers (Munneke and Yavas, 2001; and Allen, Faircloth, Forgery, and Rutherford, 2003) that differences among brokerage firms and or their agents suggest the possibility that some homes sell at premium prices and over a shorter time horizon than is the case with other broker-assisted transactions handled by less skilled or motivated agents. That is, do some types of agents consistently obtain higher prices for clients and customers and sell their properties faster? If so, buyers and sellers may not be indifferent with respect to their choice or use of salespeople and should seek out ways to identify the more skilled and more highly motivated agents.
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