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.
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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.
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.
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.
Riley (2001) provides an excellent review of the asymmetric information literature with a strong concentration on the signaling and screening aspects.
The total number of items does not include the required seller’s disclosure, virtual tours, lender pre-approval documents, relocation addenda, etc.
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 = β0+β1LnSQFT+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.
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.
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.
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.
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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
- Hedonic modeling
- Hazard modeling
- Information overload
- Multiple listing service
- Real estate marketing