Real Estate Brokers: Do they inflate housing prices? - CEREG

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uyers in their thirties pay 1.76% more. This could be due to the fact that these categories ofbuyers lack experience and knowledge of the real estate market. The coefficients for the otherage trenches of buyers are not significant. Concerning the seller’s age, real estate brokerobtains higher selling price for their clients aged between forty and sixty nine. The increase isabout 2.8% for the first two categories and 2.4% for the last one. Surprisingly they manage toincrease by 4.7% the prices of homes sold by individuals over eighty years of age which mayresult from a confidence effect. Indeed, this could be ascribed to the fact that elderly personshave lived in their neighbourhood for a long time and may know the real estate agent closestto his house. It appears that young buyers spend more for their houses when working with abroker whereas older sellers benefit from engaging a broker.We next examine the impact of real estate agents on the socio-occupational activities ofbuyers and sellers. Real estate brokers have a positive impact on prices paid by buyers fromthe categories intermediate-grade occupations and other persons without occupational activitywith an increase of respectively 1.9% and 8.85%. The probit estimation showed that people inthe latter category where more likely to work with a broker and, when they do use a brokerthey pay much more for their homes with equal hedonic surface. We assumed that peoplebuying houses from this category were wealthy and had supposedly high opportunity costs.Therefore to avoid the annoyance of searching a house for a long time and negotiating withthe seller, they heavily rely on the real estate agent. Brokers may take advantage of this typeof client by raising the price of the houses in order to earn a higher money commission.Clerical (2.9%) and manual (5.5%) workers obtain higher prices for their homes by engaginga broker. Note that the coefficients for the RE variable in all the socio-occupationalsubsamples are positives with the exception of buyers falling into the managers and highergradeoccupations category.Real estate brokers do not appear to discriminate between matrimonial status and gender asmost RE coefficients are not significant. They seem to increase the prices of homes bothbought and sold by single men. Brokers also statistically manage to sell widows’ homes forhigher prices.22
Table 5 │House price estimates: OLSThe dependent variable is PM2. The values of the coefficient RE for the full and subsambles are presented.Sample Coefficient Std Error Significance level Average PM2Full sample 28.04 10.72 0.0089 2176.38CitiesBordeaux 9.53 37.35 0.7987 2059.12LRT 85.00 40.33 0.0354 2034.19Lyon 56.74 21.89 0.0096 2381.66Marseille 74.47 29.06 0.0105 2328.93Montpellier 54.96 74.81 0.463 2237.09Nancy 12.39 46.87 0.7917 1572.68Nantes -65.31 31.18 0.0364 2175.39Rennes -41.42 33.33 0.2143 2210.90Strasbourg -13.00 34.43 0.7058 1888.58Toulouse 52.11 30.86 0.0916 2106.68Number of roomsR1 80.44 31.90 0.0118 2345.23R2 41.79 21.51 0.0521 2203.50R3 -11.12 18.83 0.555 2127.26R4 2.59 21.03 0.9021 2071.00R5 25.82 41.10 0.5301 2172.06R6 -21.26 110.59 0.8479 2378.01Construction codeA 189.58 96.60 0.0511 2449.91B 88.87 44.16 0.0446 2293.41C 97.03 37.59 0.01 2180.06D 40.00 19.15 0.0368 2006.50E 0.50 24.68 0.984 2053.83F 7.47 25.52 0.7696 2236.64G -64.83 36.00 0.072 2602.52H -21.04 32.24 0.5142 2134.29Buyer ageAge 18-29 -9.64 18.75 0.6074 2093.85Age 30-39 37.66 19.78 0.057 2142.36Age 40-49 80.40 26.29 0.0023 2204.35Age 50-59 24.16 29.80 0.4177 2250.93Age 60-69 -8.38 47.76 0.8608 2323.93Age 70-79 -49.52 75.34 0.5117 2426.58Age 80 and over -456.00 618.21 0.4847 2229.61Seller ageAge 18-29 9.65 36.83 0.7934 2267.72Age 30-39 9.49 20.44 0.6426 2284.74Age 40-49 62.90 26.75 0.0188 2197.94Age 50-59 61.19 24.53 0.0127 2165.95Age 60-69 51.24 27.33 0.061 2122.05Age 70-79 -27.61 38.22 0.4702 2070.06Age 80 and over 90.77 50.16 0.0709 1929.1923
Page 1 and 2: Real Estate Brokers: Do they inflat
Page 4: esults have risen from empirical st
Page 7 and 8: Zietz and Newsome (2001), examined
Page 9 and 10: - In terms of education he must hol
Page 11 and 12: ias, when not corrected for in the
Page 13 and 14: The number of rooms is included to
Page 15 and 16: Other characteristics such as matri
Page 17 and 18: Table 4 │Probit estimates of brok
Page 19 and 20: This is surprising as the assisted
Page 21: We estimate separate regressions fo
Page 25 and 26: experience of buyers and sellers me
Page 27 and 28: ReferencesBajtelsmit, V. L. and E.
Page 29: Annex 2 │Chart of MarseilleThe ma

Real Estate Brokers: Do they inflate housing prices? - CEREG

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