Auction versus Negotiated Sale: Evidence from Real Estate Sales
Real Estate Economics, Forthcoming
Posted: 13 Sep 2013
Date Written: August 20, 2013
We offer a theoretical and empirical comparison of auctions and negotiated sales. We first build a simple model to show that auctions generate a higher relative price than negotiated sales when demand for the asset is strong, when the asset is more homogeneous, and when the asset attracts buyers with higher valuations. Using data from property sales in Singapore, we find support for our theoretical predictions. In addition, we find that auctions do not necessarily generate a higher price premium for foreclosed properties than for non-foreclosed properties.
Keywords: Auction, Negotiated Sale, Market Conditions, Product Homogeneity, Foreclosure
Suggested Citation: Suggested Citation