Seller Over-Pricing and Listing Contract Length: The Effects of Endogenous Listing Contracts on Housing Markets

30 Pages Posted: 15 Apr 2013

See all articles by Randy Anderson

Randy Anderson

Prudential Real Estate Investors

Raymond T. Brastow

Federal Reserve Banks - Quantitative Supervision & Research

Geoffrey K. Turnbull

University of Central Florida

Bennie D. Waller

Longwood University

Date Written: April 13, 2013

Abstract

This paper examines how seller pricing decisions influence listing contract length and how these decisions affect price and liquidity in housing markets. Because list price affects broker effort required to sell the property, brokers respond to seller overpricing by increasing their desired listing period. At the same time, sellers respond to longer listing contracts by adjusting their pricing strategy. Both affect broker sales effort, hence realized selling price and liquidity. House transaction data from Virginia indicate that greater over-pricing by sellers prompts brokers to pursue longer listing contracts, which subsequently lengthen marketing time but increase selling price. The results reveal a novel transmission mechanism from higher list price (which induces longer contracts) to selling price and liquidity.

Keywords: Listing contract, list price, seller pricing, house price, house liquidity

Suggested Citation

Anderson, Randy and Brastow, Raymond T. and Turnbull, Geoffrey K. and Waller, Bennie D., Seller Over-Pricing and Listing Contract Length: The Effects of Endogenous Listing Contracts on Housing Markets (April 13, 2013). Available at SSRN: https://ssrn.com/abstract=2250434 or http://dx.doi.org/10.2139/ssrn.2250434

Randy Anderson

Prudential Real Estate Investors ( email )

8 Campus Drive
Parsippany, NJ 07054
United States

Raymond T. Brastow

Federal Reserve Banks - Quantitative Supervision & Research ( email )

United States

Geoffrey K. Turnbull

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

Bennie D. Waller (Contact Author)

Longwood University ( email )

201 High Street
Farmville, VA 23909
United States
434-395-2046 (Phone)
434-395-2203 (Fax)

HOME PAGE: http://www.benniewaller.com

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