Deal or no Deal? The Time-on-Market, Time-to-Close, and Residential Transaction Prices

Martijn Dröes, Marc Francke and Yumei Wang

ERES from European Real Estate Society (ERES)

Abstract: Unlike many other major asset classes, when buying a physical asset like real estate, the legal date of the transfer of ownership is typically somewhere after the date of purchase. Using residential real estate as an example, we hypothesize that this period, the time-to-close, has a positive impact on transactions prices as a seller wants to be compensated by the buyer for the expected losses in terms of foregone house price appreciation, interest payments of a bridge loan, and any short-term rental costs over the time-to-close period. We show corroborative empirical evidence using a combination of administrative and realtor data from the Netherlands. Our results imply that the time-to-close is a fundamental part of the transaction process of physical assets and, as such, plays an important role in the price determination of such assets.

Keywords: legal date of transfer of ownership; real estate; asset price of physical assets; seemingly unrelated regression (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2023_99

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