Full or Empty - the Influence of Furniture in Flat Valuations

Visual representations play a paramount role in real estate sales, and thus valuation, therefore we show pictures of two different apartment conditions to experimental subjects. We investigate in a 2 x 2 experimental design if a furnished apartment (where the furniture is explicitly not included in the purchase price) is valued differently compared to the same apartment without furniture. The test treatment contains pictures of a flat with average furniture (no style elements or costly products). The control treatment depicts the same apartment without furniture (toilet and kitchen line are included). We show the two sets of pictures in different sequences to university student subjects and let them post a value estimate for both groups of apartment pictures. In preliminary research we find evidence that disorder, which should not have an impact on property valuation, has a significant influence on value estimates lowering the mean price estimate by around 13%. Due to the evidence on the influence of disorder, we hypothesise that the presence of furniture increases the attractiveness of the presented flat and therefore has a positive impact on price evaluations.