The Omission of House Age in MLS Database Listings: The Effect on Selling Price and Time on Market

An asymmetric information problem occurs in the home buying process when sellers know more about a house than potential buyers. The listing agent must decide how much of this information to report in the local MLS and to syndicate to other sites. In some MLS datasets, the agent can choose to mark the age as “unknown,” essentially omitting this listing information. The omission raises several relevant questions, such as, why does age omission occur, how do age-omitted listed properties differ in characteristics from age-listed properties, and what effect does age omission have on a property’s time on the market and selling price? The findings show that age omission is more likely to occur when listing agents are less productive, and when homes are older and smaller, but in better condition relative to their peers. Age omission does not increase the property’s time on the market (TOM). When including time on market in the pricing model, however, omitted age properties appear to sell at a 4.7% discount. But age-omission properties have latent characteristics, and when correcting for this sample selection bias, the discount declines to a statistically insignificant 2%. The findings suggest that if less productive agents perceive an advantage to omitting a house’s age, real estate market pricing efficiency removes any significant benefit from using the strategy. The market appears to reduce the potential price incurred by the seller resulting from the omission of a property’s age.