The Evidence is in on the Choice of a Lockbox

Does the choice of a lockbox matter? Do the older type lockbox systems influence the final transaction price or the marketing time of property? These questions are often pondered by real estate professionals. Older key and combination systems are low tech, easy to employ, and less costly to the broker. Newer electronic lockboxes are often more complicated, provide additional information by way of technology, and are slightly more expensive than their low tech counterparts. The trade-off is therefore between ease of use, information, and cost of operation.

If the different lockbox systems do not influence transaction outcomes (price and marketing time), then the choice of the lockbox system can be left up to the broker without costs to the sellers of property. On the other hand, if one system produces either a pricing discount or extended marketing times, then brokers need to be aware of these differences in order to better serve their clients.

Recent research by Benefield and Morgan answer these questions.[i]. The researchers directly test for the impact of lockbox type (newer electronic versus older systems) on property price and property marketing time. After controlling for other difference in listings such as location, age, size, seller motivation, and quality, Benefield and Morgan find that older lockbox systems, on average, do not influence the time it takes to market property. Property pricing, however, is another matter. Specifically, Benefield and Morgan find a negative impact on price from the use of the older lockbox system. More to the point, older lockbox systems appear to not influence marketing time but result in lower selling prices. The pricing discount was a staggering seven percent on average.[ii].

IMPLICATIONS
There is now statistical evidence (not just professional speculation) that indicates the inferiority of the older lockbox systems. Therefore, wherever financially practical, brokers should stop their use of older key and combination lockbox systems in favor of the newer electronic systems. It now appears that these newer electronic lockboxes lead to a better sharing of information and feedback between listing and showing brokers resulting in better prices.

ENDNOTES:


[i]. Benefield, J. D. and J. M. Morgan, Ease-of-Access, Home Prices, and Marketing Times: The Choice of Lockbox Type, Forthcoming in the Journal of Housing Research.

[ii]. The authors believe that at least part of this discount is related to the type (mostly lower priced, lower demand) properties on which the older systems are employed.

© Copyright Ken H. Johnson. This material may be freely duplicated and republished under the following conditions: (a) the author’s name must be clearly visible; (b) the author’s journal affiliation must be clearly visible; and (c) the author’s university affiliation must be clearly visible. Otherwise, this material may not be reproduced in any form without the written consent of the author.

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