Winning Bidders: Is There a Strategy?

There is an extensive literature base on time on the market and the relationship to both asking price and agreed price but relatively little quantitative analysis has been conducted on the process that occurs between the time of listing and agreeing a residential property for sale. This paper concentrates on that period by analysing the bidding process that occurs between listing and agreement. This research focuses on one of the largest datasets of bidding histories for residential properties containing the individual transaction histories of 3000 residential properties in a UK city for the period 2002-2008. It is a period of dramatic change in the housing market combining unprecedented growth of house prices in 2005, 2006 and the early part of 2007 with the market turning in mid/late 2007 followed by a rapid decline in 2008. The paper explores whether there are statistically significant patterns emerging between the bidding behaviour displayed by a winning bidder in comparison to other bidders and how this changes over the cycle. The paper specifically focuses upon incremental time and incremental price differences between the winning bidder and other bidders.