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Timing of Bids at Pooled Real Estate Auctions

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  • Vanderporten, Bruce

Abstract

When many similar properties are being auctioned, auctioneers often resort to the pooled design. The winning bidder of a given round is given a choice among all the unclaimed (pooled) properties. Bidding strategy depends on expectations of rival bidders' behavior as well as personal valuation. Anecdotal evidence from condominium auctions suggests that bidding decisions can produce price anomalies. This study develops a simple theoretical model with three active bidders and three units for sale to show how such anomalies may emerge. Estimation is then made of a hedonic price model using data from a condominium auction of 53 units on three separate dates. The empirical results support the view that the best buys are found in the middle of the auction with over-payments at the beginning and end. Copyright 1992 by Kluwer Academic Publishers

Suggested Citation

  • Vanderporten, Bruce, 1992. "Timing of Bids at Pooled Real Estate Auctions," The Journal of Real Estate Finance and Economics, Springer, vol. 5(3), pages 255-267, September.
    • Handle: RePEc:kap:jrefec:v:5:y:1992:i:3:p:255-67
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    Citations

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    Cited by:

    1. Flavio Menezes & Paulo Monteiro, 2003. "Synergies and price trends in sequential auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 8(1), pages 85-98, August.
    2. Menezes, Flavio Marques & Engelbrecht-Wiggans, Richard, 2001. "Why do Bidders Drop Out from a Sequential Auction," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 55(1), January.
    3. Gerard Marty & Raphaele Preget, 2007. "A Socio-economic Analysis of French Public Timber Sales," Working Papers - Cahiers du LEF 2007-03, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.
    4. El Hadi Caoui & Gérard Marty, 2023. "Random drawing in sequential auctions: investigating the role of a market device in timber sales," Review of Agricultural, Food and Environmental Studies, Springer, vol. 104(2), pages 101-122, June.
    5. Orley Ashenfelter & Kathryn Graddy, 2003. "Auctions and the Price of Art," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 763-787, September.
    6. Orley Ashenfelter & Kathryn Graddy, 2002. "Art Auctions: A Survey of Empirical Studies," Working Papers 121, Princeton University, Department of Economics, Center for Economic Policy Studies..
    7. Chris Jones & Flavio Menezes & Francis Vella, 2004. "Auction Price Anomalies: Evidence from Wool Auctions in Australia," The Economic Record, The Economic Society of Australia, vol. 80(250), pages 271-288, September.
    8. Carl R. Gwin & Seow-Eng Ong & Andrew C. Spieler, 2005. "Auctions and Land Values: An Experimental Analysis," Urban Studies, Urban Studies Journal Limited, vol. 42(12), pages 2245-2259, November.
    9. Ashenfelter, Orley & Genesove, David, 1992. "Testing for Price Anomalies in Real-Estate Auctions," American Economic Review, American Economic Association, vol. 82(2), pages 501-505, May.
    10. Seow Eng Ong, 2006. "Price Discovery in Real Estate Auctions: The Story of Unsuccessful Attempts," Journal of Real Estate Research, American Real Estate Society, vol. 28(1), pages 39-60.
    11. Engelbrecht-Wiggans, Richard & Kahn, Charles M., 1999. "Calibration of a model of declining prices in cattle auctions," The Quarterly Review of Economics and Finance, Elsevier, vol. 39(1), pages 113-128.
    12. Eklof, Matias & Lunander, Anders, 2003. "Open outcry auctions with secret reserve prices: an empirical application to executive auctions of tenant owner's apartments in Sweden," Journal of Econometrics, Elsevier, vol. 114(2), pages 243-260, June.
    13. Mark G. Dotzour & Everard Moorhead & Daniel T. Winkler, 1998. "The Impact of Auctions on Residential Sales Prices in New Zealand," Journal of Real Estate Research, American Real Estate Society, vol. 16(1), pages 57-72.

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