Do Buyer Incentives Work for Houses?

Posted: 25 Jan 2014

See all articles by Kenneth Soyeh

Kenneth Soyeh

Georgia State University

Jonathan Wiley

Georgia State University

Ken H. Johnson

Florida Atlantic University - Finance

Date Written: January 23, 2014

Abstract

The impact of incentives on marketing duration is examined for residential real estate using data from the Multiple Listing Service during a real estate downturn. The focus is on incentives offered directly by sellers to potential homebuyers. The evidence suggests that incentives are not capitalized into the selling price during the softened market conditions. Alternatively, incentives are found to have a significant reduction in marketing time, however this is found to be true only for closing costs and not for other incentive classifications. The benefit of reduced expected market time from offering incentives is quickly diminished when the seller initially overprices the listing by a large amount.

Keywords: Incentives; Brokerage; Residential; Transactions; Overpricing

Suggested Citation

Soyeh, Kenneth and Wiley, Jonathan and Johnson, Ken H., Do Buyer Incentives Work for Houses? (January 23, 2014). Journal of Real Estate Finance and Economics, Vol. 48, No. 2, 2014. Available at SSRN: https://ssrn.com/abstract=2384033

Kenneth Soyeh

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Jonathan Wiley (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Ken H. Johnson

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

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