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Leave Vacant or Rent: The Optimal Decision for Absentee Home Sellers

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Author Info

  • Terrence M. Calurentie

    ()
    (Department of Finance, University of Nevada, Las Vegas, 4505 So. Maryland Parkway, Las Vegas, Nevada 89154-6025)

  • Marvin L. Wolverton

    (Department of Finance, University of Nevada, Las Vegas, 4505 So. Maryland Parkway, Las Vegas, Nevada 89154-6025)

Abstract

Home-sellers may not occupy their property when listed for sale. While previous research has analyzed the effect of a vacancy on the sales price of residential properties, no research to date has quantified the economic benefits and costs of renting vis-à-vis leaving a property vacant while listed for sale. Renting a property will produce revenue but perhaps at the cost of a lower sale price and/or longer time on the market. This paper employs data on 55,202 homes sold in the Las Vegas, Nevada area to determine if renting a property increases or decreases the wealth position of home sellers. The results of an empirical test of the model are used to quantify the wealth effect. The findings indicate that renting the property produces a significant reduction in the home seller’s wealth position.

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File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol28n01/02.25_38.pdf
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Bibliographic Info

Article provided by American Real Estate Society in its journal journal of Real Estate Research.

Volume (Year): 28 (2006)
Issue (Month): 1 ()
Pages: 25-38

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Handle: RePEc:jre:issued:v:28:n:1:2006:p:25-38

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Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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Web: http://aux.zicklin.baruch.cuny.edu/jrer/about/get.htm

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Cited by:
  1. Geoffrey Turnbull & Velma Zahirovic-Herbert, 2012. "The Transitory and Legacy Effects of the Rental Externality on House Price and Liquidity," The Journal of Real Estate Finance and Economics, Springer, vol. 44(3), pages 275-297, April.

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