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Repair Expenses, Selling Contracts, and House Prices

This paper examines the impact of repair expenses on the selling price of a house. Using data from settlement statements, we investigate the frequency and extent to which performance of major repairs is part of the sales contract. We find that most homes are restored to a "normally maintained" state each time the home changes hands, and that the cost of bringing the home to this condition is included as part of house selling price. This implies it may be unnecessary to measure maintenance levels when using transaction data to study components of house price or to construct house price indexes.

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File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol20n03/03.323_336.pdf
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Article provided by American Real Estate Society in its journal Journal of Real Estate Research.

Volume (Year): 20 (2000)
Issue (Month): 3 ()
Pages: 323-336

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Handle: RePEc:jre:issued:v:20:n:3:2000:p:323-336
Contact details of provider: Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
Web page: http://www.aresnet.org/
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Order Information: Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
Web: http://pages.jh.edu/jrer/about/get.htm Email:


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  1. Stephen Malpezzi & Larry Ozanne & Thomas G. Thibodeau, 1987. "Microeconomic Estimates of Housing Depreciation," Land Economics, University of Wisconsin Press, vol. 63(4), pages 372-385.
  2. Sirmans, G. Stacy & Smith, Stanley D. & Sirmans, C. F., 1983. "Assumption Financing and Selling Price of Single-Family Homes," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 18(03), pages 307-317, September.
  3. Shilling, James D. & Sirmans, C. F. & Turnbull, Geoffrey K. & Benjamin, John D., 1992. "Hedonic prices and contractual contingencies," Journal of Urban Economics, Elsevier, vol. 32(1), pages 108-118, July.
  4. Arnott, Richard & Davidson, Russell & Pines, David, 1983. "Housing Quality, Maintenance and Rehabilitation," Review of Economic Studies, Wiley Blackwell, vol. 50(3), pages 467-94, July.
  5. Reschovsky, James D, 1992. "An Empirical Investigation into Homeowner Demand for Home Upkeep and Improvement," The Journal of Real Estate Finance and Economics, Springer, vol. 5(1), pages 55-71, March.
  6. Jan K. Brueckner, 1984. "Creative Financing and House Prices: A Theoretical Inquiry into the Capitalization Issue," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(4), pages 417-426.
  7. Chinloy, Peter, 1980. "The effect of maintenance expenditures on the measurement of depreciation in housing," Journal of Urban Economics, Elsevier, vol. 8(1), pages 86-107, July.
  8. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
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