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The impact of price change on time on market and selling price of single family houses

Author

Listed:
  • Ksenija Bogosavljevic
  • Ken Johnson
  • Anita Pennathur

Abstract

In residential real estate, sellers often revise their initial listing price. Our paper investigates the impact of such price changes on the final result of the sales transaction. Using a sample of single family home sales transactions in Palm Beach, Florida for the period 2006-2016, we find that 45% of transactions show a price change after the initial listing price. We examine both price change up and price change down on the probability of sale, time on market, and the selling price received by the seller. In our first set of estimations, we examine the impact of a price change on the probability of sale. We next employ Lewbel's (2012) two-stage least squares estimation to examine how the degree of overpricing impacts time on market and the sales price. Our results show that change in the list price, that is, not pricing correctly in the initial stage of the selling process is costly for the seller as it decreases the probability of sale, significantly increases the time on market, and also decreases the final sales price for the property.

Suggested Citation

  • Ksenija Bogosavljevic & Ken Johnson & Anita Pennathur, 2018. "The impact of price change on time on market and selling price of single family houses," ERES eres2018_325, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2018_325
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2018-325
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    More about this item

    Keywords

    Listing Price Change; Probability of Sale; Sales Price; Time on Market;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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