Price discovery

Do real estate agents accurately report home sale prices?

Three professors at Florida Gulf Coast University's Lutgert College of Business in Fort Myers sought an answer by comparing home-sale prices reported by real estate agents on a multiple-listing service, better known by its acronym MLS, with final settlement statements called HUD-1 at closing.

Professors Tim Allen, Kenneth Lusht and Shelton Weeks found that the average of all price errors by the MLS data they studied was $10,277, or a difference of 4.9% from the prices reported on the settlement statements at closing. In their findings published recently in the Appraisal Journal, the professors found price differences in nearly 9% of their sample ranging in size from -1.1% to 21.4%.