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A comparison of the appraisal process for auction and private treaty residential sales

  • Stevenson, Simon
  • Young, James
  • Gurdgiev, Constantin

This paper examines residential sale mechanisms from an appraisal perspective and empirically tests for differences in the valuation process for auctioned and private treaty sales. We test the hypothesis that agents use different criteria in preparing the guide prices for auctioned housing, with an element of under pricing in order to aid in the marketing of the property. The empirical tests are undertaken on a sample of auctioned and private treaty sales in Dublin, Ireland for the period of 1997-2004. We find that the evidence is consistent with the hypothesis that agents do adjust valuations for auctions to attract additional potential bidders.

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

Volume (Year): 19 (2010)
Issue (Month): 2 (June)
Pages: 145-154

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Handle: RePEc:eee:jhouse:v:19:y:2010:i:2:p:145-154
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622881

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  2. Bernhardt, Dan & Scoones, David, 1994. "A Note on Sequential Auctions," American Economic Review, American Economic Association, vol. 84(3), pages 653-57, June.
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  9. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
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  13. Holt, Charles A, Jr, 1979. "Uncertainty and the Bidding for Incentive Contracts," American Economic Review, American Economic Association, vol. 69(4), pages 697-705, September.
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  15. Ford, James Scott & Rutherford, Ronald C. & Yavas, Abdullah, 2005. "The effects of the internet on marketing residential real estate," Journal of Housing Economics, Elsevier, vol. 14(2), pages 92-108, June.
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  18. John R. Knight, 2002. "Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(2), pages 213-237.
  19. Wang, Ruqu, 1993. "Auctions versus Posted-Price Selling," American Economic Review, American Economic Association, vol. 83(4), pages 838-51, September.
  20. Joseph T.L. Ooi & C.F. Sirmans & Geoffrey K. Turnbull, 2006. "Price Formation Under Small Numbers Competition: Evidence from Land Auctions in Singapore," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 34(1), pages 51-76, 03.
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  22. Kenny, Geoff, 1999. "Asymmetric Adjustment Costs and The Dynamics of Housing Supply," Research Technical Papers 3/RT/99, Central Bank of Ireland.
  23. Seow Eng Ong & Kenneth Lusht & Chee Yong Mak, 2005. "Factors Influencing Auction Outcomes: Bidder Turnout, Auction Houses and Market Conditions," Journal of Real Estate Research, American Real Estate Society, vol. 27(2), pages 177-192.
  24. Christopher J. Mayer, 1998. "Assessing the Performance of Real Estate Auctions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(1), pages 41-66.
  25. Roche, Maurice J., 2001. "The rise in house prices in Dublin: bubble, fad or just fundamentals," Economic Modelling, Elsevier, vol. 18(2), pages 281-295, April.
  26. McAfee, R. Preston & McMillan, John, 1987. "Auctions with a stochastic number of bidders," Journal of Economic Theory, Elsevier, vol. 43(1), pages 1-19, October.
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  28. Adams, Paul D & Kluger, Brian D & Wyatt, Steve B, 1992. "Integrating Auction and Search Markets: The Slow Dutch Auction," The Journal of Real Estate Finance and Economics, Springer, vol. 5(3), pages 239-53, September.
  29. Wilson, Robert, 1977. "A Bidding Model of Perfect Competition," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 511-18, October.
  30. Kenny, Geoff, 1999. "Modelling the demand and supply sides of the housing market: evidence from Ireland1," Economic Modelling, Elsevier, vol. 16(3), pages 389-409, August.
  31. G. Donald Jud & Terry G. Seaks, 1994. "Sample Selection Bias in Estimating Housing Sales Prices," Journal of Real Estate Research, American Real Estate Society, vol. 9(3), pages 289-298.
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