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Setting Offer Prices by Housing Developers - Selected Issues in the Light of Literature Review

Author

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  • Dittmann Iwona

    (Faculty of Finance University of Economics in Wrocław)

Abstract

This paper deals with selected theoretical issues pertaining to the setting of asking prices by housing developers. Determinants of the buyer’s and seller’s reservation prices have been identified. The advantages and disadvantages, in terms of behavioral economics, of the pricing strategies practiced by housing developers have been indicated. The strategy based on fixing an asking price roughly equal to the estimated market value of the property was compared with the strategy based on offering an inflated asking price (with the assumption of price negotiations). A second comparison concerned the strategy of price disclosure compared with the strategy of price non-disclosure.The reflections contained within the article were based on behavioral economics and marketing theory. The discussion was based largely on foreign articles, observed examples of pricing policy carried out by housing developers in Poland, and information obtained from housing developers and real estate brokers who are active on the primary market.

Suggested Citation

  • Dittmann Iwona, 2014. "Setting Offer Prices by Housing Developers - Selected Issues in the Light of Literature Review," Real Estate Management and Valuation, Sciendo, vol. 22(4), pages 17-26, February.
    • Handle: RePEc:vrs:remava:v:22:y:2014:i:4:p:17-26:n:2
    DOI: 10.2478/remav-2014-0033
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    More about this item

    Keywords

    housing market; developer; pricing strategy;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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