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Property Condition Disclosure Law: Does 'Seller Tell All' Matter in Property Values?

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  • Anupam Nanda

    (University of Connecticut)

Abstract

At the time when at least two-thirds of the US states have already mandated some form of seller's property condition disclosure statement and there is a movement in this direction nationally, this paper examines the impact of seller's property condition disclosure law on the residential real estate values, the information asymmetry in housing transactions and shift of risk from buyers and brokers to the sellers, and attempts to ascertain the factors that lead to adoption of the disclosur law. The analytical structure employs parametric panel data models, semi-parametric propensity score matching models, and an event study framework using a unique set of economic and institutional attributes for a quarterly panel of 291 US Metropolitan Statistical Areas (MSAs) and 50 US States spanning 21 years from 1984 to 2004. Exploiting the MSA level variation in house prices, the study finds that the average seller may be able to fetch a higher price (about three to four percent) for the house if she furnishes a state-mandated seller's property condition disclosure statement to the buyer.

Suggested Citation

  • Anupam Nanda, 2005. "Property Condition Disclosure Law: Does 'Seller Tell All' Matter in Property Values?," Working papers 2005-47, University of Connecticut, Department of Economics, revised Jul 2006.
  • Handle: RePEc:uct:uconnp:2005-47
    Note: This paper is adapted from the third chapter of my doctoral dissertation. I would like to thank my advisors - Stephen L. Ross, John M. Clapp, and Dennis R. Heffley for their insightful comments on the idea and methodology. I greatly benefited from helpful comments from James Davis and Katherine Pancak. Comments from Dhamika Dharmapala, Thomas Miceli, and seminar participants at the University of Connecticut, Economics Brownbag Seminar Series are acknowledged. I would also like to thank Tim Storey (National Conference of State Legislatures), Daniel Conti (Bureau of Labor Statistics) for assistance with data, and Sascha Becker of University of Munich for assistance with STATA module on propensity score matching algorithm (written by Sascha Becker and Andrea Ichino). All remaining rrors are mine.
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    References listed on IDEAS

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    Cited by:

    1. Jeffrey Zabel, 2007. "The Impact of Imperfect Information on the Transactions of Contaminated Properties," NCEE Working Paper Series 200703, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jan 2007.
    2. Anupam Nanda, 2008. "Property Condition Disclosure Law: Why Did States Mandate ‘Seller Tell All’?," The Journal of Real Estate Finance and Economics, Springer, vol. 37(2), pages 131-146, August.

    More about this item

    Keywords

    Property Condition Disclosure; Housing Price Index; Propensity Score Matching Event Study;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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