The Disciplining Effect of Concern for Referrals: Evidence from Real Estate Agents

51 Pages Posted: 11 Apr 2016

See all articles by Lan Shi

Lan Shi

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Christina Tapia

Manchester Metropolitan University - Department of Economics

Date Written: Summer 2016

Abstract

Real estate agents rely on clients for referrals to generate future business; this article examines whether concern for referrals disciplines agents. We compare results for sellers who move to another area (and are less likely to provide referrals) with results for sellers who remain in the area (and are more likely to provide referrals). We find that moving‐away sellers’ houses have a higher sale rate, sell faster and sell for less (even after controlling for moving‐away sellers’ greater impatience). We also provide evidence that the disciplining effect of concern for referrals is stronger for agents who place a greater value on reputation. Finally, among sellers who are better at evaluating and monitoring agents, we see less of the high sell rate, low sale‐price effect.

Suggested Citation

Shi, Lan and Tapia, Christina, The Disciplining Effect of Concern for Referrals: Evidence from Real Estate Agents (Summer 2016). Real Estate Economics, Vol. 44, Issue 2, pp. 411-461, 2016, Available at SSRN: https://ssrn.com/abstract=2761975 or http://dx.doi.org/10.1111/1540-6229.12102

Lan Shi (Contact Author)

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street SW
Washington, DC 20219
United States

Christina Tapia

Manchester Metropolitan University - Department of Economics ( email )

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