Brokers' effect on housing transaction outcomes

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Insinööritieteiden korkeakoulu | Master's thesis
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Real Estate Investment and Finance
Degree programme
Master’s Programme in Real Estate Economics
This Master’s Thesis aims to find out the effect that a real estate broker and the broker’s characteristics have on apartment transaction outcomes, measured by time-on-market (TOM) and discount from listing price to transaction price in apartment transactions. This research employs two research methods: literature review and empirical research. Firstly, existing scientific literature on liquidity, factors affecting TOM and price concessions is presented and then brokers’ effect on TOM and discount from listing price to transaction price is empirically addressed. The data used in the research, containing 1,460 apartment transactions, has been combined from collected apartment advertisements from advertisement service and information about apartment transactions in multi-storey residential buildings in Helsinki, Finland conducted by five large Finnish real estate broker companies collected from service. In addition, factors such as interest rates, spatial distances and individual real estate agent characteristics that earlier literature has found to affect TOM and difference between listing price and transaction price are derived. The results of the empirical research indicate that there are differences in performance of the five real estate broker companies measured in TOM and difference between listing price and transaction price and certain companies outperform others according to the results. In addition, licensed real estate agents seem to obtain smaller difference between listing price and transaction price than their unlicensed peers. However, a number of limitations in the sources and matching process of the advertisement-transaction data that can affect the results are identified. Including subsequent apartment advertisements securely, adding real estate agents’ characteristics into the data and exploring potential to utilise Hazard model methodology could enhance accuracy of the results and is encouraged in the future research on this topic.
Viitanen, Kauko
Thesis advisor
Toivonen, Saija
real estate broker, real estate agent, TOM, listing price, transaction price
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