Abstract
Although buying one's home is by far the largest financial transaction in most people's lives, micro- level behavioral research on home pricing has been quite limited. We test for a simple behavioral effect; does the attractiveness of a realtor influence the final purchase price of a home? To do so, we take advantage of two unique structural characteristics of the Australian real estate market in which (i) buyers rarely use their own realtor and (ii) homes are commonly sold both by auction and by private treaty. Our results show that buyers pay a 2.3% average premium (approximately USD 16,000) for their house when the realtor is one standard deviation of attractiveness above average. This premium is concentrated in homes sold by auction, which is consistent with a behavioral interpretation where private treaty home buyers partially filter the impact of realtor appearance over time.