Getting Upsold by Real Estate

When prospective home buyers hire a real estate agent, they may end up getting more than they had pictured themselves bargaining for.

When prospective home buyers hire a real estate agent, they may end up getting more than they had pictured themselves bargaining for. Real estate agents, it turns out, do more than show off properties, interpret price points, and sing the praises of trendy design features like open-plan kitchens and soaking tubs. Their role, as sociologist Max Besbris reveals in Upsold: Real Estate Agents, Prices, and Neighborhood Inequality, is instead to work a kind of sorcery on buyers—and, by extension, on entire neighborhoods—through a complex matrix of business and interpersonal tactics.

Perhaps most strikingly, Besbris shows how agents strategically use emotions and emotional displays to shape buyers’ preferences. For example, agents engage in “situational structuring” to evoke emotional responses from clients and encourage sales. They carefully choreograph the order in which they show properties and orchestrate stops and travel routes to make certain properties seem more attractive than others. They overtly express enthusiasm about higher-priced listings to generate excitement. They emphasize scarcity to elicit anxiety and encourage buyers to make offers quickly. The ultimate goal of such tactics is to forge an emotional connection between a buyer’s identity, lifestyle, and lifestyle aspirations with a specific place. This involves drawing symbolic boundaries between areas that are “perfect for someone like them”—or for whom they hope to be—and those that are not.

A home is typically the largest expenditure a person will ever make. While there has been competition from real estate websites like Redfin and agent alternatives in recent years, the vast majority of people who buy homes in the United States still use real estate agents. But, surprisingly, the work of real estate agents has received little empirical attention in the social sciences. In Upsold, Besbris asks: How do buyers decide which homes to buy? And, crucially, what role do real estate agents play in shaping buyers’ housing preferences, as well as the broader issue of residential inequalities?

Through a rich body of qualitative and quantitative data, Besbris argues that real estate agents are not just market intermediaries who provide transaction support; they are market makers. Their presence and behavior directly shape the perceived value of neighborhoods and homes and reproduce residential segregation by income and race. In addition, Upsold tells a broader theoretical story. Typical assumptions of neoclassical economics would hold that buyers’ preferences are relatively stable and stem from their personal priorities. But Besbris argues that, on the contrary, buyers’ market preferences are not fixed. They are malleable and are constructed through social interactions with market intermediaries such as real estate agents.

While Upsold contains some lacunae around how agents operate—specifically, around factors related to children’s schooling and the role of commission-based compensation in shaping how agents urge clients to buy—the book valuably shows the importance of interpersonal interaction for shaping consumer behavior in real estate markets and beyond.

To study the role that real estate agents play in shaping buyers’ preferences, Besbris amassed an impressive volume and variety of data. He shadowed 12 agents working with 57 buyers throughout Manhattan and Brooklyn, two of the city’s two most expensive areas. He conducted follow-up interviews with buyers years later to gauge their ultimate satisfaction with their homes and with the purchase process overall. Additionally, he observed 87 open houses throughout the New York metro area. To understand what type of training agents do—and do not—receive, he observed real estate licensing classes. Because one could argue that New York City is unique in its housing stock and prices, he interviewed 45 agents across the state. He also included quantitative analysis of national data on real estate agents and housing prices.

Despite being relatively short in length, the book covers a lot of ground while elucidating how real estate agents do their work. In addition to “situational structuring” and other strategic displays of emotion mentioned earlier, Upsold explores the impression-management work real estate agents perform to establish trust, credibility, and expertise in a context where real estate agents no longer have exclusive access to information about available properties.

Across his research, Besbris consistently observed buyers articulating one set of criteria at the beginning of their search but changing them after interacting with agents. While this pattern occurred with a number of criteria, it was especially profound regarding price.

Buyers’ market preferences are malleable and are constructed through social interactions with market intermediaries such as real estate agents.

During the pandemic, my family quickly discovered we could use more space, to accommodate remote work and remote schooling. We were fortunate to have resources to invest, so, we started searching for a new home. I had bought real estate before, but never through an agent. The experience was jarring. We were consistently shown listings that were above our stated price point and in neighborhoods we had not originally expressed interest in; when “comps” were run to estimate a listing’s actual value, recent sales were cherrypicked to justify a higher price. At the time, I believed there was something idiosyncratic about our search. But after reading Besbris’s eye-opening study of New York real estate agents, I realized this is part and parcel of working with an agent. We, like so many others, were upsold.

Besbris shows in great detail how real estate agents shaped buyers’ price preferences through interaction. Every buyer he observed was upsold, like my family was: they ended up offering a price that was above their originally stated price limit. As one agent remarked, buyers “always spend more than they think they will; they just don’t know it yet.” He documents in detail the tactics agents use to upsell clients. Interestingly, he found differences between how wealthy and less wealthy clients are perceived and treated, and observed that wealthy clients are upsold by much higher degrees (and are generally perceived as more enjoyable to work with) than are less wealthy clients.

Chapter 4 is perhaps the book’s highlight. There, Besbris zooms out from the individual home-buying process, examining the implications of interactional patterns—especially upselling—on housing prices. In his quantitative analysis, he finds that areas that have more agents tend to have higher home values. At first glance, one may think this is because agents flock to areas where prices (and thus, commissions) are high. But Besbris’s analysis suggests that the way that real estate agents conduct their work directly contributes to this phenomenon.

By convincing clients of the upward value of properties within a given area and essentially upselling all who come to an area, they are (arguably, artificially) increasing the prices of the local housing stock in affluent areas. This can help explain why, even in times of financial instability, housing prices have remained remarkably resilient in higher-priced areas: agents keep them high. In addition, the way agents interact with clients reproduces racial segregation. While agents are very aware of this, they insist (likely due to legal restrictions on racial steering and social-desirability biases in research interviews) that segregation occurs due to buyer and seller preferences rather than agent gatekeeping.


Cities Run by Real Estate

By Gordon Douglas

The book is an extremely engaging read and a valuable addition to the fields of economic sociology, cultural sociology, and the sociology of inequality. One aspect of real estate markets that received less attention than I would have expected, however, is how commission-based compensation dictates real estate agents’ interactions with clients. Besbris discusses how agents rarely mentioned and often downplayed personal financial motives, but there is a direct incentive for agents to upsell: the higher the sales price, the larger the commission. Exploring the role of commissions in greater depth could provide additional evidence for Besbris’s argument about the outsize influence that individual real estate agents—or groups of them—can have on entire neighborhoods.

In addition, I was surprised to see little discussion of factors related to children’s schooling, given that prior research—such as that by sociologists including Annette Lareau, Kimberly Goyette, Elliot Weininger, Ann Owens, and others—shows that it is a major driver of residential choice in the United States. This could be because of the demographics of home buyers in Manhattan and Brooklyn or the ubiquity of private schooling among the affluent in large urban centers.

Overall, Upsold is an intricate, well-researched, and well-written book that provides new insights into real estate, spatial inequalities, and the real estate profession. It is a must-read for scholars interested in markets, decision-making, and residential inequalities.


This article was commissioned by Michèle Lamont. icon

Featured-image photograph by Josh Wilburne / Unsplash