Leave Vacant or Rent: The Optimal Decision for Absentee Home Sellers

Abstract:     
Home-sellers may not occupy their property when listed for sale. While previous research has analyzed the effect of a vacancy on the sales price of residential properties, no research to date has quantified the economic benefits and costs of renting vis-a-vis leaving a property vacant while listed for sale. Renting a property will produce revenue but perhaps at the cost of a lower sale price and/or longer time on the market. This paper employs data on 55,202 homes sold in the Las Vegas, Nevada area to determine if renting a property increases or decreases the wealth position of home sellers. The results of an empirical test of the model are used to quantify the wealth effect. The findings indicate that renting the property produces a significant reduction in the home seller's wealth position.

Number of Pages in PDF File: 14

Keywords: vacant, residential, sales price, time on market, TOM

JEL Classification: C22, D91, J63, L85, R14, R15, R21, R31

Accepted Paper Series