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Time on Market and the Cash Discount for Condos

Author

Listed:
  • Eli Beracha

    (Florida International University)

  • Julia Freybote

    (Portland State University)

  • Zhenguo Lin

    (Florida International University)

  • Michael J. Seiler

    (College of William & Mary)

Abstract

We investigate whether the cash discount for condos is affected by time on market (TOM). Theoretically and empirically, we show that the cash discount has two components: First, condos purchased with cash sell at a discount compared to mortgage-financed condos, which is in line with the cash discount identified in the housing literature. The second component is a TOM-variable cash discount that increases the longer a condo is on the market. In addition, our empirical analysis suggests the cash discount only exists for low-price condos and disappears in higher price segments. In particular, for low-price condos, the cash discount comprises of a 9.42% fixed cash discount and 0.1% per day TOM-variable cash discount. Our results suggest TOM represents an additional explanation for the cash discount in condos and moderates the relation between cash purchase and sales price.

Suggested Citation

  • Eli Beracha & Julia Freybote & Zhenguo Lin & Michael J. Seiler, 2024. "Time on Market and the Cash Discount for Condos," The Journal of Real Estate Finance and Economics, Springer, vol. 68(2), pages 188-217, February.
    • Handle: RePEc:kap:jrefec:v:68:y:2024:i:2:d:10.1007_s11146-022-09913-0
    DOI: 10.1007/s11146-022-09913-0
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    References listed on IDEAS

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    5. Andres Jauregui & Alan Tidwell & Vivek Sah, 2019. "Sample Selection Approaches to Estimating and Allocating House Transaction Funding Price Differentials," The Journal of Real Estate Finance and Economics, Springer, vol. 58(3), pages 366-407, April.
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