"Assessing the Performance of Real-Estate Auctions"
©
Real Estate Economics,
1998
Volume: 26
|
Issue: 1
|
Pages: 41-66
Publication type: Journal article
Research Archive Topic: Real Estate
Abstract
This article investigates the performance of real estate auctions relative to negotiated sales. It uses a repeat-sales methodology to control for unobserved differences in the quality of auction properties. Properties auctioned in Los Angeles during the 1980s boom sold at an estimated discount of 0%-9%, while sales in Dallas following the oil bust obtained discounts of 9%-21%. This evidence is consistent with the theoretical prediction that the auction discount increases in downturns when a seller trades-off a longer than expected selling time in a search market against an immediate auction sale. The study finds no evidence of the declining price anomaly.
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