As a postscript: you might say, well, why do I care about liquidity? One neat empirical fact that we show is that for normal listings (non-REO, non-foreclosure), the probability of *subsequent* foreclosure (in the next two years) is highly correlated with agent experience.

Why? Well the homes that list and sell don& #39;t go into foreclosure. But those that do not sell are highly likely to go into foreclosure during the crisis. Since experience has large effects on the probability of listing sale, it& #39;s natural that this maps across!