Senior home sellers take a hit on profits

"The decline begins around age 70 and accelerates thereafter, even after accounting for location, market timing, demographics and property characteristics, the report explained. Most earlier studies relied on self-reported home values, which can be unreliable. This analysis instead links actual home sales from a CoreLogic database with voter registration records to determine a seller's age. The resulting dataset covers about 10 million repeat sales nationwide."

"Focusing on properties listed on the multiple listing service (MLS), where descriptions are more detailed, researchers analyzed listings language for signs of renovation or neglect. Homes sold by younger owners were far more likely to mention major upgrades, such as new roofs or remodeled kitchens. Listings from the oldest sellers were much more likely to include phrases like as-is or fixer-upper."

"How a home is sold also plays a major role. Older sellers are more likely to market homes off the MLS through private listings and are more likely to sell to real estate investors. Both practices are associated with lower returns. Private listings limit exposure to buyers while investor sales often involve faster deals at discounted prices, the report explained."

An 80-year-old seller earns about 0.5% less per year than a 45-year-old, producing roughly 5% lower sales proceeds over an average 11-year holding period (about $20,000 on a $400,000 home). The decline begins around age 70 and accelerates thereafter, even after accounting for location, market timing, demographics and property characteristics. Actual home-sales records were linked with voter-registration data to identify seller age, yielding about 10 million repeat sales and covering roughly 40% of transactions. Poor upkeep explains about 10% of the age-related return gap. Older sellers are more likely to use off-MLS private listings or sell to investors, both associated with lower returns.

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