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Listing strategies and housing busts: Cutting loss or cutting list price?

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  • Liu, Xiaolong
  • van der Vlist, Arno J.

Abstract

Listing a house for sale has been referred to as the most agonizing and stressful decision associated with selling one’s home. This may seem particularly true for homeowners expecting to sell for less than their original purchase price. In this paper, we investigate whether listing strategies among homeowners who face potential loss differ from those who do not. We use MLS data from the Randstad area of the Netherlands for the period 2008–2013 for which we have detailed information regarding the listing strategies. We find that those homeowners who expect loss set higher initial list price by 10% on average than those homeowners who do not. Sellers with prospective loss upon initial listing are more likely and more aggressively to revise their list price downward than other sellers.

Suggested Citation

  • Liu, Xiaolong & van der Vlist, Arno J., 2019. "Listing strategies and housing busts: Cutting loss or cutting list price?," Journal of Housing Economics, Elsevier, vol. 43(C), pages 102-117.
    • Handle: RePEc:eee:jhouse:v:43:y:2019:i:c:p:102-117
    DOI: 10.1016/j.jhe.2018.09.006
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    Cited by:

    1. Lawrence Kryzanowski & Yanting Wu, 2023. "Signaling effects of recurrent list‐price reductions on the likelihood of house sales," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 46(1), pages 99-130, February.

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    More about this item

    Keywords

    Housing; Loss; Property transaction; List price revision; STAR model;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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