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Bargaining over residential real estate: evidence from England

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  • Merlo, Antonio
  • Ortalo-Magne, Francois

Abstract

This paper presents and investigates a new data set of individual residential property transactions in England. The main novelty of the data is the record of all listing price changes and all offers made on a property, as well as all the visits by potential buyers for a subset of the properties. We analyze individual seller and potential buyers behavior within property transaction histories. This leads us to establish a number of stylized facts pertaining specifically to the timing and terms of agreement in housing transactions, and more generally, to the sequence of events that occur from initial listing to sale agreement. We assess the limitations of existing theories in explaining the data and propose an alternative theoretical framework for the study of the strategic interactions between buyers and sellers that is consistent with the empirical evidence.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 56 (2004)
Issue (Month): 2 (September)
Pages: 192-216

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Handle: RePEc:eee:juecon:v:56:y:2004:i:2:p:192-216

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Web page: http://www.elsevier.com/locate/inca/622905

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  8. Sobel, Joel & Takahashi, Ichiro, 1983. "A Multistage Model of Bargaining," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 50(3), pages 411-26, July.
  9. Taylor, Curtis R, 1999. "Time-on-the-Market as a Sign of Quality," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 66(3), pages 555-78, July.
  10. Springer, Thomas M, 1996. "Single-Family Housing Transactions: Seller Motivations, Price, and Marketing Time," The Journal of Real Estate Finance and Economics, Springer, Springer, vol. 13(3), pages 237-54, November.
  11. Ausubel, Lawrence M. & Cramton, Peter & Deneckere, Raymond J., 2002. "Bargaining with incomplete information," Handbook of Game Theory with Economic Applications, Elsevier, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 3, chapter 50, pages 1897-1945 Elsevier.
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  20. John R. Knight & C. F. Sirmans & Geoffrey K. Turnbull, 1998. "List Price Information in Residential Appraisal and Underwriting," Journal of Real Estate Research, American Real Estate Society, American Real Estate Society, vol. 15(1), pages 59-76.
  21. Abdullah Yavaş, 1992. "A Simple Search and Bargaining Model of Real Estate Markets," Real Estate Economics, American Real Estate and Urban Economics Association, American Real Estate and Urban Economics Association, vol. 20(4), pages 533-548.
  22. Horowitz, Joel L, 1992. "The Role of the List Price in Housing Markets: Theory and an Econometric Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 7(2), pages 115-29, April-Jun.
  23. Burdett, Kenneth & Vishwanath, Tara, 1988. "Declining Reservation Wages and Learning," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 55(4), pages 655-65, October.
  24. Donald Haurin, 1988. "The Duration of Marketing Time of Residential Housing," Real Estate Economics, American Real Estate and Urban Economics Association, American Real Estate and Urban Economics Association, vol. 16(4), pages 396-410.
  25. James J. Heckman & Christopher J. Flinn, 1982. "New Methods for Analyzing Structural Models of Labor Force Dynamics," NBER Working Papers 0856, National Bureau of Economic Research, Inc.
  26. Michel Glower & Donald R. Haurin & Patric H. Hendershott, 1998. "Selling Time and Selling Price: The Influence of Seller Motivation," Real Estate Economics, American Real Estate and Urban Economics Association, American Real Estate and Urban Economics Association, vol. 26(4), pages 719-740.
  27. Krainer, John, 2001. "A Theory of Liquidity in Residential Real Estate Markets," Journal of Urban Economics, Elsevier, Elsevier, vol. 49(1), pages 32-53, January.
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