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Offer price, transaction price and time on the market
John Mattson Fastighets AB, Lidingö, Sweden.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0002-9944-0510
2006 (English)In: Property Management, ISSN 0263-7472, E-ISSN 1758-731X, Vol. 24, no 4, 415-426 p.Article in journal (Refereed) Published
Abstract [en]

Purpose - The purpose of this paper is to investigate whether or not the offer price affects the transaction price and the number of days the property is on the market. Specifically, is it possible for the broker to use the offer price as an instrument for obtaining a higher transaction price? Design/methodology/approach - To test the hypothesis the general hedonic model is used, where the deviation of the transaction price and expected price from the offer price is a function of time on the market. Findings - The results indicate that a high offer price is more likely to result in a high ratio of transaction price to expected price compared to a low offer price. Research limitations/implications - However, the overall conclusion is affected by the state of the market, that is, whether the market is static, rising or falling. Practical implications - The best selling strategy in a rising market seems to be set a high offer price compared to the expected sale price. Originality/value - The main contribution is that the paper not only analyzes the relationship between offer and transaction price, but also its relationship to expected price. It also tests for the existence of spatial autocorrelation, which is unique in this type of study.

Place, publisher, year, edition, pages
2006. Vol. 24, no 4, 415-426 p.
Keyword [en]
Pricing policy, Purchase agreements, Real estate
National Category
Economics
Identifiers
URN: urn:nbn:se:kth:diva-59629DOI: 10.1108/02637470610671631Scopus ID: 2-s2.0-33747817681OAI: oai:DiVA.org:kth-59629DiVA: diva2:475980
Note
QC 20120120Available from: 2012-01-11 Created: 2012-01-11 Last updated: 2017-12-08Bibliographically approved

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