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Does Neighborhood Condition Create a Discount Effect on House List Prices? Evidence from Physical Disorder

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  • Wonseok Seo

Abstract

The purpose of this study is to investigate the discount impact of the neighborhood condition on the difference between house list and final selling prices. I use a multiple regression model with d-statistics methodology to estimate the discount impact. The results show that real estate agents systematically overestimate house prices in areas affected by physical disorder. The real estate agents lack the data and methods to arrive at reliable price estimates, and the neighborhood condition provides explanatory power for a large portion of the difference between sales price and list price, supporting the assumption that neighborhood disorder is associated with declining sales prices.

Suggested Citation

  • Wonseok Seo, 2018. "Does Neighborhood Condition Create a Discount Effect on House List Prices? Evidence from Physical Disorder," Journal of Real Estate Research, Taylor & Francis Journals, vol. 40(1), pages 69-88, January.
    • Handle: RePEc:taf:rjerxx:v:40:y:2018:i:1:p:69-88
    DOI: 10.1080/10835547.2018.12091492
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