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Volume 32, Number 3, 2010

Listing Contract Length and Time on Market
 

Bennie D. Waller
Longwood University
201 High Street
Farmville, VA 23901

Ray Brastow
Federal Reserve Bank of Richmond and Longwood University
201 High Street
Farmville, VA 23901

Ken H. Johnson
Florida International University
Department of Finance and Real Estate
MARC 230
11200 SW 8th Street
Miami, FL 33199

Email: Kenh.johnson@fiu.edu

 

Abstract:

Miceli (1989) in a search for the optimal time to allow a broker to market property provides a theoretical model which posits that the principal (seller) may use the length of the listing contract to motivate the agent (listing broker) to better align incentives. Expanding slightly on Miceli, this present work predicts that longer time allotted the broker to market residential property will decrease broker effort resulting in lower search intensity and eventually a longer marketing span for property, ceteris paribus. This prediction is borne out across three empirical modeling methodologies commonly used in time on market studies.

 


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