An optimal strategy for maximizing the expected real-estate selling price: accept or reject an offer?
Motivated by a real-life situation, we put forward a model and then derive an optimal strategy that maximizes the expected real-estate selling price when one of the only two remaining buyers has already made an offer but the other one is yet to make. Since the seller is not sure whether the other buyer would make a lower or higher offer, and given no recall, the seller needs a strategy to decide whether to accept or reject the first-come offer. The herein derived optimal seller's strategy, which maximizes the expected selling price, is illustrated under several scenarios, such as independent and dependent offers by the two buyers, and for several parametric price distributions.
|Date of creation:||14 Aug 2012|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anglin, Paul M., 2004. "How long does it take to buy one house and sell another?," Journal of Housing Economics, Elsevier, vol. 13(2), pages 87-100, June.
- Anglin, Paul M & Rutherford, Ronald & Springer, Thomas M, 2003. "The Trade-Off Between the Selling Price of Residential Properties and Time-on-the-Market: The Impact of Price Setting," The Journal of Real Estate Finance and Economics, Springer, vol. 26(1), pages 95-111, January.
- Michael A. Arnold, 1999. "Search, Bargaining and Optimal Asking Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(3), pages 453-481.
- Ping Cheng & Zhenguo Lin & Yingchun Liu, 2008. "A Model of Time-on-Market and Real Estate Price Under Sequential Search with Recall," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(4), pages 813-843, December.
- S. Christian Albright, 1977. "A Bayesian Approach to a Generalized House Selling Problem," Management Science, INFORMS, vol. 24(4), pages 432-440, December.
- Tapan Biswas & Jolian Mchardy, 2012.
"Asking Price And Price Discounts: The Strategy Of Selling An Asset Under Price Uncertainty,"
Review of Economic Analysis,
Rimini Centre for Economic Analysis, vol. 4(1), pages 17-37, June.
- Tapan Biswas & Jolian Mchardy, 2007. "Asking Price and Price Discounts: The Strategy of Selling an Asset Under Price Uncertainty," Theory and Decision, Springer, vol. 62(3), pages 281-301, May.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:40694. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.