Auction Versus Negotiated Sale: Evidence from Real Estate Sales

39 Pages Posted: 19 May 2015

See all articles by Yuen Leng Chow

Yuen Leng Chow

National University of Singapore - Institute of Real Estate Studies

Isa Emin Hafalir

Carnegie Mellon University - David A. Tepper School of Business

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics

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Date Written: Summer 2015

Abstract

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 nonforeclosed properties.

Suggested Citation

Chow, Yuen Leng and Hafalir, Isa Emin and Yavas, Abdullah, Auction Versus Negotiated Sale: Evidence from Real Estate Sales (Summer 2015). Real Estate Economics, Vol. 43, Issue 2, pp. 432-470, 2015. Available at SSRN: https://ssrn.com/abstract=2607728 or http://dx.doi.org/10.1111/1540-6229.12056

Yuen Leng Chow (Contact Author)

National University of Singapore - Institute of Real Estate Studies ( email )

21 Heng Mui Keng Terrace #04-02
119613
Singapore
+65-66015040 (Phone)

Isa Emin Hafalir

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Abdullah Yavas

University of Wisconsin - School of Business - Department of Real Estate and Urban Land Economics ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States

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