Sealed-Bid Auctions and Fixed Price Sales: Seller Choice in Housing Markets

  • Stephen Buschbom
  • Carolyn Dehring
  • Neil Dunse
  • Henry Munneke
Article
  • 137 Downloads

Abstract

The choice of marketing system used to allocate property rights is important across many industries. In Scotland, two systems of marketing real property co-exist: fixed price, where homes are listed for sale at a fixed price on “first-come-first-serve” basis, and offers over, which is a sealed-bid auction format where the seller indicates a floor for bids. Using 4,780 detached housing sales between 1984 and 2002, this paper explores potential price effects of the seller’s choice of marketing system. Specifically, a log price model is estimated based on transactions under both marketing systems acknowledging endogeneity in the choice of marketing system. The empirical procedure reveals that sellers select the marketing system which results in the highest predicted price for their property.

Keywords

Housing markets Selection bias First-price sealed bid auctions 

JEL Classification

D83 R21 R31 

Notes

Acknowledgments

We appreciate the constructive feedback of anonymous reviewers as well as seminar participants at the American Real Estate and Urban Economics Association annual meeting and European Real Estate Society conference. We mourn our departed friend and college, Carolyn Dehring, who was actively involved in this project. We hope this paper reflects her love and passion for research.

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  • Stephen Buschbom
    • 1
  • Carolyn Dehring
    • 1
  • Neil Dunse
    • 2
  • Henry Munneke
    • 1
  1. 1.Department of Insurance, Legal Studies, Real EstateUniversity of Georgia, Brooks HallAthensUSA
  2. 2.School of the Built EnvironmentHeriot-Watt UniversityEdinburghUK

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