I made note of these two interesting points when I read the original Freakonomics a few years ago, to remember whenever buying and selling a home. They are from pages 7-9 and 71-76.
1. On Incentives
Incentives not aligned between seller and real estate agent—if the agent sells your house for $10,000 less, they lose only $150 in commission, while you lose $10,000. Thus, the incentives create a motivation for quick sales, and $150 or so is a small price to pay.
2. On Code Words
Real-estate agent code: Descriptive words (granite, state-of-the-art, corian, maple gourmet) mean it is a good house, and are associated with a higher selling price and used by agents when selling their own homes. Empty adjectives (fantastic, spacious, charming, great neighborhood, !) are code for “not much worth describing.”
- Fantastic and charming = not much worth describing
- Spacious = impractical
- Great neighborhood = this house not that great, but there are nice ones around
- ! = real shortcomings
- Granite, gourmet, corian, etc. are specific and straightforward. If you like granite, you might like the house; but even if you don’t, granite certainly doesn’t connote a fixer-upper.