The Housing Scene

Too Many Listings Dilute Results

If that real estate agent you're considering listing your house with brags about having dozens of listings from other clients, you may want to consider someone else.

Agents who are "working" more than, say, six listings at one time are not as productive as those who have less than a half-dozen in their back pockets, according to new research.

"Greater agent inventory is associated with a slightly lower price and a significantly higher time on (the) market," according to the study by three faculty members at Longwood University in Farmville, Virginia, who were joined in the research by a colleague at the University of Central Florida in Orlando.

Agents tend to prefer having a lot of listings: The more listings, the greater the probability of nabbing a commission. Their brokers, the guys who pay agents their share of the deal, like them, too: Not only does it make the company appear larger and more successful, it also means the broker will earn a fee even if the house is sold by an agent from another firm.

Indeed, brokers like listings so much that they encourage their agents to secure a seller's name on the dotted line by offering higher commission splits to the company's largest listers.

But the recent study published in the Journal of Housing Economics -- "How Many Listings Are Too Many?" by Xun Bian, Bennie Waller and Scott Wentland of Longwood and Geoffrey Turnbull of UCF -- found that additional listings place greater claims on an agent's time and energy. That, in turn, has "adverse sales performance consequences" for the client.

Most sellers want to sell at the highest possible price and as quickly as they can. But if you're just one of your agent's many sellers, you're all competing not only for buyers, but also for your agent's time and effort. And all of you are likely to become disenchanted if your expectations are not met.

One reason for sellers' disappointment is that most people neither understand nor appreciate the logistics required in selling a property, from the time a house is listed all the way through closing. That's understandable. After all, how many times in your life do you sell a house?

But sellers also fail to realize that the burden placed on agents to do their jobs increases exponentially with each additional listing.

Previous research has also found that more listings dilute agents' efforts and increase their focus on higher-priced properties. But the Longwood/UCF study goes further by actually putting the situation into numbers consumers can easily understand.

To do that, the researchers studied more than 21,000 properties listed on an unspecified Virginia multiple listing service that were sold during a 10-year period (from April 1999 to June 2009). The typical house in the sample -- 26 years old with three bedrooms and two baths -- was listed at $173,600 and was sold for $168,100. It was on the market for an average of 111 days.

Here's what the four researchers found: When an agent had nine listings, the average sales price for his or her "inventory" was only slightly below the baseline average -- not even 1 percent -- and marketing time was nearly 14 percent longer.

That works out to a $1,000 lower selling price and an extra 15 days on the market. Not terrible.

But when the listing agent represents a "very high" number of sellers -- 15 or more -- his or her typical selling price is 3 percent less and the property remains on the market for 129 percent longer than the average.

Numerically, that's more than $5,000 less than agents with more modest inventories get for their buyers. And it takes 142 days -- a month longer -- to find a buyer as opposed to 111 days for the average listing in the study.

That's significant, the study says: "While the impact on price is modest, the effect of agent inventory on liquidity is substantial." And it's true even though agents with a high number of listings represented just 10 percent of the sample.

The conclusion: "There is a relationship between agent inventory and (the) sales outcomes that sellers care most about -- selling price and time-on-market."

"The results are striking," the study continues. "Agents representing 15 or more listings may be trying to represent too many clients at one time, resulting in a substantially larger marketing duration and an important source of illiquidity for numerous homes in this market. ...

"Greater inventory diverts selling effort. ... resulting in longer time-on-market for all houses in the inventory."

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