Price Signals and Uncertainty in Commercial Real Estate Transactions

Matthew Cypher (), S. McKay Price (), Spenser Robinson () and Michael Seiler ()
Additional contact information
Matthew Cypher: Georgetown University
S. McKay Price: Lehigh University
Spenser Robinson: Central Michigan University

The Journal of Real Estate Finance and Economics, 2018, vol. 57, issue 2, No 4, 246-263

Abstract: Abstract Using a sample of CCIM designees and candidates in an experimental setting, this study examines the impact of broker signaling in commercial real estate transactions. It also explores the effect of certainty of closure in commercial real estate transactions. Findings suggest brokers are able to influence transaction pricing. Moreover, detailed analysis reveals that when a signal is above a reference point implied by previous transactions, the strength of the signal matters; privately communicated signals from reliable sources have significantly greater impact than signals which are made widely available. Additionally, we find an approximately 10% premium in transactions with lower certainty of closure than one with high certainty. The latter result varies by transactional participant type; owner/developers require a larger premium than institutional sellers.

Keywords: Commercial Real Estate; Broker; Signaling; Uncertainty; Execution Risk (search for similar items in EconPapers)
JEL-codes: G11 G24 R33 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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Working Paper: Price Signals and Uncertainty in Commercial Real Estate Transactions (2017)
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DOI: 10.1007/s11146-017-9617-0

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