The Trade-Off Between the Selling Price of Residential Properties and Time-on-the-Market: The Impact of Price Setting
Ronald Rutherford and
Thomas M Springer
The Journal of Real Estate Finance and Economics, 2003, vol. 26, issue 1, 95-111
When a house is placed on the market, the seller must choose the initial offer price. Setting the price too high or too low affects the marketability of the property. While there is near universal agreement that the seller faces a trade-off between selling at a higher price and selling in less time, there is less agreement about how to measure this trade-off. This paper offers a framework for analysis and shows that an increase in the list price increases expected time-on-the-market (TOM). Because house buyers must solve a type of signal extraction problem, the effect of a higher list price is magnified for houses in a market segment having a low predicted variance of the list price. This paper also shows that the list price of houses which are withdrawn before sale has a higher mean and variance, and that the possibility of withdrawal censors information about the time-on-the-market. Copyright 2003 by Kluwer Academic Publishers
References: Add references at CitEc
Citations: View citations in EconPapers (75) Track citations by RSS feed
Downloads: (external link)
http://journals.kluweronline.com/issn/0895-5638/contents link to full text (text/html)
Access to full text is restricted to subscribers.
Working Paper: The Trade-off Between the Selling Price of Residential Properties and Time -on-the-Market: The impact of the Price Setting (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:26:y:2003:i:1:p:95-111
Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11146/PS2
Access Statistics for this article
The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans
More articles in The Journal of Real Estate Finance and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().