When real estate agents sell their own, rather than clients', houses, they leave the houses on the market for a longer time (10 days longer on average) and wind up with better prices (2 percent higher on average). Why

Because the real estate agents, when selling their own houses, do not experience the principal-agent problem, but they do when they sell their clients houses.

Explanation:

The principal-agent problem occurs when an economic activity has a principal, who is passive in the transaction, and an agent, who is activie in the transaction, and refers to the problems of coordination that may emerge between the two.

For example, when the real estate agent sells a client house, he is the agent, and the client is the principal, and the problem is that the wishes of the client may not always be met by the actions of the agent, the real estate agent.

But when the real estate agent sells his own house, he becomes the principal and the agent at the same time, and the problem disappears. This is why in this case, the house price is likely to be higher than in the aforementioned case.