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Sealed-Bid Auctions and Fixed Price Sales: Seller Choice in Housing Markets

Author

Listed:
  • Stephen Buschbom

    (University of Georgia, Brooks Hall)

  • Carolyn Dehring

    (University of Georgia, Brooks Hall)

  • Neil Dunse

    (Heriot-Watt University)

  • Henry Munneke

    (University of Georgia, Brooks Hall)

Abstract

The choice of marketing system used to allocate property rights is important across many industries. In Scotland, two systems of marketing real property co-exist: fixed price, where homes are listed for sale at a fixed price on “first-come-first-serve” basis, and offers over, which is a sealed-bid auction format where the seller indicates a floor for bids. Using 4,780 detached housing sales between 1984 and 2002, this paper explores potential price effects of the seller’s choice of marketing system. Specifically, a log price model is estimated based on transactions under both marketing systems acknowledging endogeneity in the choice of marketing system. The empirical procedure reveals that sellers select the marketing system which results in the highest predicted price for their property.

Suggested Citation

  • Stephen Buschbom & Carolyn Dehring & Neil Dunse & Henry Munneke, 2018. "Sealed-Bid Auctions and Fixed Price Sales: Seller Choice in Housing Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 56(4), pages 525-545, May.
    • Handle: RePEc:kap:jrefec:v:56:y:2018:i:4:d:10.1007_s11146-017-9603-6
    DOI: 10.1007/s11146-017-9603-6
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    More about this item

    Keywords

    Housing markets; Selection bias; First-price sealed bid auctions;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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