Seller Over-Pricing and Listing Contract Length: The Effects of Endogenous Listing Contracts on Housing Markets

    Authors

    R. I. Anderson; R. T. Brastow; G. K. Turnbull;B. D. Waller

    Comments

    Authors: contact us about adding a copy of your work at STARS@ucf.edu

    Abbreviated Journal Title

    J. Real Estate Financ. Econ.

    Keywords

    Listing contract; List price; Seller pricing; House price; House; liquidity; RESIDENTIAL REAL-ESTATE; SELLING PRICE; TIME; LIQUIDITY; EXPIRATION; BROKERAGE; QUALITY; Business, Finance; Economics; Urban Studies

    Abstract

    This paper examines how seller pricing decisions influence listing contract length and how these decisions affect price and liquidity in housing markets. Because list price affects broker effort required to sell the property, brokers respond to seller overpricing by increasing the negotiated listing contract length. At the same time, sellers respond to longer listing contracts by adjusting their list price strategy. Both list price and length of marketing time affect broker sales effort and therefore a property's realized selling price and liquidity. Analysis of house transaction data from Virginia indicates that greater over-pricing by sellers prompts brokers to pursue longer listing contracts, which subsequently lengthen marketing time but increase selling price. The results reveal a novel transmission mechanism from higher list price (which induces longer contracts) to selling price and liquidity.

    Journal Title

    Journal of Real Estate Finance and Economics

    Volume

    49

    Issue/Number

    3

    Publication Date

    1-1-2014

    Document Type

    Article

    Language

    English

    First Page

    434

    Last Page

    450

    WOS Identifier

    WOS:000341750400006

    ISSN

    0895-5638

    Share

    COinS