Listing Contract Length and Time on Market

Abstract

Miceli (1989), in a search for the optimal time to allow a broker to market property, 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 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.