The impact of price change on time on market and selling price of single family houses

Ksenija Bogosavljevic, Ken Johnson and Anita Pennathur

ERES from European Real Estate Society (ERES)

Abstract: In residential real estate, sellers often revise their initial listing price. Our paper investigates the impact of such price changes on the final result of the sales transaction. Using a sample of single family home sales transactions in Palm Beach, Florida for the period 2006-2016, we find that 45% of transactions show a price change after the initial listing price. We examine both price change up and price change down on the probability of sale, time on market, and the selling price received by the seller. In our first set of estimations, we examine the impact of a price change on the probability of sale. We next employ Lewbel's (2012) two-stage least squares estimation to examine how the degree of overpricing impacts time on market and the sales price. Our results show that change in the list price, that is, not pricing correctly in the initial stage of the selling process is costly for the seller as it decreases the probability of sale, significantly increases the time on market, and also decreases the final sales price for the property.

Keywords: Listing Price Change; Probability of Sale; Sales Price; Time on Market (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2018-01-01
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2018_325

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