Auction versus Negotiated Sale: Evidence from Real Estate Sales

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Journal Article
Real Estate Economics, 2015, 43 (2), pp. 432 - 470
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We offer a theoretical and empirical comparison of auctions and negotiatedsales. We first build a simple model to show that auctions generate a higherrelative price than negotiated sales when demand for the asset is strong,when the asset is more homogeneous and when the asset attracts buyerswith higher valuations. Using data from property sales in Singapore, we findsupport for our theoretical predictions. In addition, we find that auctions do notnecessarily generate a higher price premium for foreclosed properties than fornonforeclosed properties.
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