Skip to main content

On the Relationship Between Property Price, Time-on-Market, and Photo Depictions in a Multiple Listing Service

Abstract

This paper investigates the relationship of property price and time-on-market to the use of property photo depictions in a multiple listing service. Empirical testing reveals that price as a function of photo depictions is increasing at a decreasing rate for both interior and exterior photos. Testing also reveals that time-on-market as a function of property photos is increasing at a decreasing rate for interior photos, but is not related to exterior photos. Results are sensitive to the number of photos allowed by the Multiple Listing Service. Overall, the results suggest that additional photographs increase price, while simultaneously lengthening property marketing duration, ceteris paribus.

This is a preview of subscription content, access via your institution.

Notes

  1. 1.

    Keifer (1988) and Greene (1997) provide excellent discussions of the issues involved with using OLS to estimate time-on-market, particularly non-normal error terms and the use of independent variables with values that can change during the sample period. Additionally, the same two authors detail the advantages to using the Weibull and Exponential distributions, as well as other non-linear distributional forms, to model property time-on-market.

  2. 2.

    In unreported tests, 2SLS for property price and time-on-market, as well as OLS for property time-on-market, were used to confirm the robustness of the reported results, with quantitatively and qualitatively similar outcomes. These unreported tests are available from the authors upon request.

  3. 3.

    In order to keep the stories simple in the search theory and asymmetric information scenarios, second order conditions are assumed to be such that local minima and maxima exist to induce closed form solutions.

  4. 4.

    See, for example, Haurin (1988); Sirmans et al (1995); and Glower et al. (1998).

  5. 5.

    Riley (2001) provides an excellent review of the asymmetric information literature with a strong concentration on the signaling and screening aspects.

  6. 6.

    The total number of items does not include the required seller’s disclosure, virtual tours, lender pre-approval documents, relocation addenda, etc.

  7. 7.

    The calculation of both ATYP and DOP requires estimation of hedonically suggested prices. The model employed to estimate the hedonically suggested prices for use in computing ATYP and DOP is LnORIG_LP = β01LnSQFT+β2LnAGE+β3BED_3+β4BATH_2+β5HALF_BATH+β6DINING+β7RANCH+β8CONT_TRAD+β9ELEV_BASE+β10CRAWLSPACE+β11CARPORT+β12GARAGE_1+β13GARAGE_2+β14GARAGE_>=3+β15ZIP_405+β16ZIP_406+β17ZIP_407+β18ZIP_x410+β19ZIP_412+β20ZIP_414+β21ZIP_418+β22ZIP_420+β23ZIP_445+β24ZIP_455+β25ZIP_456+β26ZIP_461+β27ZIP_466+β28ZIP_483+β29ZIP_485+β30ZIP_492+β31NC+β32FIREPLACE+β33BRICK+β34GOLF+β35WATER+ε.

  8. 8.

    As an additional test, count variables for the total number of pictures were specified in the combined sample, the before limit increase subsample, and the after limit increase subsample. These results are unreported due to space considerations and the fact that the results are entirely consistent with the results obtained by examining interior and exterior photographs separately.

  9. 9.

    At the suggestion of an anonymous reviewer, the Heckman (1979) test for selection bias was conducted to rule out sample selection issues regarding the choice of the number of photos to display. Results, which are available from the authors, indicate that no sample selection bias is present.

  10. 10.

    Interestingly, a review of the data reveals that approximately 1% of the sample, exclusive of proposed construction and properties under construction, do not enter any photos into the property listing profile.

References

  1. Ackoff, R. L. (1967). Management misinformation systems. Management Science, 14, 147–156.

    Article  Google Scholar 

  2. Akerlof, G. A. (1970). The market for 'lemons': quality, uncertainty and the market mechanism. Quarterly Journal of Economics, 84, 488–500.

    Article  Google Scholar 

  3. Anglin, P. M., Rutherford, R. C., & Springer, T. M. (2003). The trade-off between selling price of residential properties and time-on-the-market: the impact of price setting. Journal of Real Estate Finance and Economics, 26, 95–111.

    Article  Google Scholar 

  4. Bajic, V. (1985). Housing-market segmentation and demand for housing attributes: some empirical findings. Journal of the American Real Estate and Urban Economics Association, 13, 58–75.

    Article  Google Scholar 

  5. Bawden, D. (2001). Information overload. Library and Information Briefings, 92, 1–15.

    Google Scholar 

  6. Butler, R. V. (1980). Cross-sectional variation in the hedonic relationship for urban housing markets. Journal of Regional Science, 20, 439–454.

    Article  Google Scholar 

  7. Carrillo, P. E. (2008). Information and real estate transactions: the effects of pictures and virtual tours on home sales. George Washington University Working Paper.

  8. Casey, C. J., Jr. (1980). Variation in accounting information load: the effect on loan officers’ predictions of bankruptcy. Accounting Review, 55, 36–49.

    Google Scholar 

  9. Chewning, E. G., Jr., & Harrell, A. M. (1990). The effect of information load on decision maker’s cue utilization levels and decision quality in a financial distress decision task. Accounting, Organizations and Society, 15, 527–542.

    Article  Google Scholar 

  10. Cubbin, J. S. (1974). Price, quality, and selling time in the housing market. Applied Economics, 6, 171–187.

    Article  Google Scholar 

  11. Dotzour, M. G., & Levi, D. R. (1992). The impact of corporate ownership on residential transaction prices. Journal of Real Estate Research, 7, 207–216.

    Google Scholar 

  12. Elder, H. W., Zumpano, L. V., & Baryla, E. A. (1999). Buyer search intensity and the role of the residential real estate broker. Journal of Real Estate Finance and Economics, 18, 351–368.

    Article  Google Scholar 

  13. Eppler, M. J., & Mengis, J. (2004). The concept of information overload: a review of literature from organization science, accounting, marketing, MIS, and related disciplines. The Information Society: An International Journal, 20, 1–20.

    Google Scholar 

  14. Forgey, F. A., Rutherford, R. C., & VanBuskirk, M. L. (1994). Effect of foreclosure status on residential selling price. Journal of Real Estate Research, 9, 313–318.

    Google Scholar 

  15. Glower, M., Haurin, D. R., & Hendershott, P. H. (1998). Selling time and selling price: the influence of seller motivation. Real Estate Economics, 26, 719–740.

    Article  Google Scholar 

  16. Greene, W. H. (1997). Econometric analysis. Upper Saddle River: Prentice-Hall.

    Google Scholar 

  17. Grise, M. L., & Gallupe, R. B. (2000). Information overload: addressing the productivity paradox in face-to-face electronic meetings. Journal of Management Information Systems, 16, 157–186.

    Google Scholar 

  18. Haurin, D. R. (1988). The duration of marketing time of residential housing. Journal of the American Real Estate and Urban Economics Association, 16, 396–410.

    Article  Google Scholar 

  19. Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47, 153–162.

    Article  Google Scholar 

  20. Iselin, E. R. (1993). The effects of the information and data properties of financial ratios and statements on managerial decision quality. Journal of Business Finance and Accounting, 20, 249–267.

    Article  Google Scholar 

  21. Kiefer, N. M. (1988). Economic duration data and hazard functions. Journal of Economic Literature, 26, 646–679.

    Google Scholar 

  22. Knight, J. R. (2002). Listing price, time-on-market, and ultimate selling price: causes and effects of listing price changes. Real Estate Economics, 30, 213–237.

    Article  Google Scholar 

  23. Miceli, T. J. (1989). The optimal duration of real estate listing contracts. AREUEA Journal, 17, 267–277.

    Google Scholar 

  24. Miller, J. A. (1956). The magical number seven plus or minus two: some limits on our capacity for processing information. Psychological Review, 63, 81–97.

    Article  Google Scholar 

  25. Miller, N. G. (1978). Time-on-the-market and selling price. Journal of the American Real Estate and Urban Economics Association, 6, 164–174.

    Article  Google Scholar 

  26. Ooi, J. T. L., Sirmans, C. F., & Turnbull, G. K. (2006). Price formation under small numbers competition: evidence from land auctions in Singapore. Real Estate Economics, 34, 51–76.

    Article  Google Scholar 

  27. Riley, J. G. (2001). Silver signals: twenty-five years of screening and signaling. Journal of Economic Literature, 39, 432–478.

    Article  Google Scholar 

  28. Rothschild, M., & Stiglitz, J. E. (1976). Equilibrium in competitive insurance markets: an essay on the economics of imperfect information. Quarterly Journal of Economics, 90, 629–649.

    Article  Google Scholar 

  29. Rutherford, R. C., Springer, T. M., & Yavas, A. (2001). The impact of contract type on broker performance. Real Estate Economics, 29, 389–409.

    Article  Google Scholar 

  30. Rutherford, R. C., Springer, T. M., & Yavas, A. (2007). Evidence of information asymmetries in the market for residential condominiums. Journal of Real Estate Finance and Economics, 35, 23–38.

    Article  Google Scholar 

  31. Schneider, S. C. (1987). Information overload: causes and consequences. Human Systems Management, 7, 143–153.

    Google Scholar 

  32. Sirmans, C. F., Turnbull, G. K., & Dombrow, J. (1995). Quick house sales: Seller mistake or luck? Journal of Housing Economics, 4, 230–243.

    Article  Google Scholar 

  33. Sirmans, G. S., Macpherson, D. A., & Zietz, E. N. (2005). The composition of hedonic pricing models. Journal of Real Estate Literature, 13, 3–43.

    Google Scholar 

  34. Spence, A. M. (1973). Job market signaling. Quarterly Journal of Economics, 87, 355–374.

    Article  Google Scholar 

  35. Springer, T. M. (1996). Single-family housing transactions: seller motivations, price and marketing time. Journal of Real Estate Finance and Economics, 13, 237–254.

    Article  Google Scholar 

  36. Swain, M. R., & Haka, S. F. (2000). Effects of information load on capital budgeting decisions. Behavioral Research in Accounting, 12, 171–199.

    Google Scholar 

  37. Turnbull, G. K., Dombrow, J., & Sirmans, C. F. (2006). Big house, little house: relative size and value. Real Estate Economics, 34, 439–456.

    Article  Google Scholar 

  38. Turnbull, G. K., Sirmans, C. F., & Benjamin, J. D. (1990). Do corporations sell houses for less? A test of housing market efficiency. Applied Economics, 22, 1389–1398.

    Article  Google Scholar 

  39. Tushman, M. L., & Nadler, D. A. (1978). Information processing as an integrating concept in organizational design. Academy of Management Review, 3, 613–624.

    Google Scholar 

  40. Tuttle, B., & Burton, F. G. (1999). The effects of a modest incentive on information overload in an investment analysis task. Accounting, Organizations and Society, 24, 673–687.

    Article  Google Scholar 

  41. Yavas, A., & Yang, S. (1995). The strategic role of listing price in marketing real estate: theory and evidence. Real Estate Economics, 23, 347–368.

    Article  Google Scholar 

  42. Zuehlke, T. W. (1987). Duration dependence in the housing market. Review of Economics and Statistics, 69, 701–709.

    Article  Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Justin D. Benefield.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Benefield, J.D., Cain, C.L. & Johnson, K.H. On the Relationship Between Property Price, Time-on-Market, and Photo Depictions in a Multiple Listing Service. J Real Estate Finan Econ 43, 401–422 (2011). https://doi.org/10.1007/s11146-009-9219-6

Download citation

Keywords

  • Hedonic modeling
  • Hazard modeling
  • Information overload
  • Multiple listing service
  • Real estate marketing