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Deed Types, House Prices and Mortgage Interest Rates

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  • David M. Brasington
  • Robert F. Sarama

Abstract

When houses are sold they come with a deed attached that spells out the legal guarantees on good title. Some deeds give clues about the characteristics of the seller or the house. Using a 37,043‐observation house price hedonic with a Bayesian spatial error model, we find the type of deed attached to a housing sale can have a dramatic correlation with the sale price. Ten deed types command a discount, and one commands a premium relative to warranty deeds. Mortgage rates for sheriff's deeds and foreclosure deeds are lower than for warranty deeds, indicating more sophisticated buyers.

Suggested Citation

  • David M. Brasington & Robert F. Sarama, 2008. "Deed Types, House Prices and Mortgage Interest Rates," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(3), pages 587-610, September.
    • Handle: RePEc:bla:reesec:v:36:y:2008:i:3:p:587-610
    DOI: 10.1111/j.1540-6229.2008.00223.x
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    References listed on IDEAS

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    1. David Brasington & Donald R. Haurin, 2006. "Educational Outcomes and House Values: A Test of the value added Approach," Journal of Regional Science, Wiley Blackwell, vol. 46(2), pages 245-268, May.
    2. Hite, Diane & Chern, Wen & Hitzhusen, Fred & Randall, Alan, 2001. "Property-Value Impacts of an Environmental Disamenity: The Case of Landfills," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 185-202, March-May.
    3. Haurin, Donald R. & Brasington, David, 1996. "School Quality and Real House Prices: Inter- and Intrametropolitan Effects," Journal of Housing Economics, Elsevier, vol. 5(4), pages 351-368, December.
    4. Karl E. Case & Robert J. Shiller, 1988. "The behavior of home buyers in boom and post-boom markets," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 29-46.
    5. Donald Haurin & David Brasington, 1996. "The Impact of School Quality on Real House Prices: Interjurisdictional Effects," Working Papers 010, Ohio State University, Department of Economics.
    6. Brasington, David M. & Hite, Diane, 2005. "Demand for environmental quality: a spatial hedonic analysis," Regional Science and Urban Economics, Elsevier, vol. 35(1), pages 57-82, January.
    7. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-392, June.
    8. Archer*, Wayne R. & Gatzlaff+, Dean H. & Ling*, David C., 1996. "Measuring the Importance of Location in House Price Appreciation," Journal of Urban Economics, Elsevier, vol. 40(3), pages 334-353, November.
    9. James P. Lesage, 1997. "Bayesian Estimation of Spatial Autoregressive Models," International Regional Science Review, , vol. 20(1-2), pages 113-129, April.
    10. Maskin, Eric S & Riley, John G, 1984. "Optimal Auctions with Risk Averse Buyers," Econometrica, Econometric Society, vol. 52(6), pages 1473-1518, November.
    11. David M. Brasington & Diane Hite, 2005. "Demand for Environmental Quality: A Spatial Hedonic Approach," Departmental Working Papers 2005-08, Department of Economics, Louisiana State University.
    12. Colwell, Peter F & Yavas, Abdullah, 1993. "The Value of Deed Quality," The Journal of Real Estate Finance and Economics, Springer, vol. 7(2), pages 143-150, September.
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    Cited by:

    1. Donner, Herman & Song, Han-Suck & Wilhelmsson, Mats, 2016. "Forced sales and their impact on real estate prices," Journal of Housing Economics, Elsevier, vol. 34(C), pages 60-68.
    2. Steven Caudill & Claudio Detotto & Dominique Prunetti, 2020. "Bargaining power in apartment sales in Corsica: A latent class approach," Urban Studies, Urban Studies Journal Limited, vol. 57(13), pages 2754-2772, October.
    3. Ying Huang & Ronald W. Spahr & Mark A. Sunderman, 2020. "The Impact of Default and Foreclosure on Housing Values: Rings Vs. Neighborhoods Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 60(3), pages 338-374, April.

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