Real Estate Blues

TK168: "Hey, since when did you have an interest in properties?"

TK158: "Erm......I'm just looking at the real estate chics! Best part is....they leave their mobile numbers!"

(Pause)

TK158: "By the way, what do they mean by nearly sold?"

TK168: "It means either the agent wants more bids or he has trouble selling the house."

Studies of real-estate agents include data that reveals how agents convey info through the for-sale ads they write. A phrase like "well-maintained," for instance, is full of meaning to an agent. It means that a house is old but not quite falling down. A savvy buyer will now this (or find out for himself once he sees the house), but to the sixty-five-year-old retiree who is selling his house, "well maintained" might sound like a compliment, which is just what the agent intends.

An analysis of the language used in real-estate ads show that certain words are powerfully correlated with the final sale price of a house. This doesn't necessarily mean that labeling a house "well maintained" causes it to sell for less than an equivalent house. It does, however, indicate that when a real-estate agent labels a house"well maintained,", she may be subtly encouraging the buyer to bid low.


Five terms Correlated to a Higher Sale Price

Granite

State-of-the-Art

Corian

Maple

Gourmet

Five Terms Correlated to a Lower Sale Price

Fantastic

Spacious

!
Charming

Great Neighbourhood

Three of the five terms correlated with a higher sale price are physical descriptions of the house itself: granite, Corian, and maple. As info goes, such terms are specific and straightforward - and therefore pretty useful. If you like granite, you might like the house; but even if you don't, "granite" certainly doesn't connote a fixer-upper. Nor does "gourmet" or "state-of-the-art," both of which seem to tell a buyer that a house is, on some level, truly fantastic.


"Fantastic," meanwhile, is a dangerously ambiguous adjective, as is "charming." Both these words seem to be a real-estate agent code for a house that doesn't have many specific attributes worth describing. "Spacious" homes, meanwhile, are often decrepit or impractical. "Great neighbourhood" signals a buyer that, well, this house isn't very nice but others nearby may be. And an exclamation point in a real estate ad is bad news for sure, a bit to paper over real shortcomings with false enthusiasm.

Source: Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt & Stephen J. Dubner