An analysis of auction strategies in apartment sales

Author:

Hungria-Gunnelin Rosane

Abstract

Purpose This paper aims to empirically test the effect of list price and bidding strategies in ascending auctions of residential real estate. Design/methodology/approach Three regression models are estimated, using a unique data set from 629 condominium apartments in the inner-city of Stockholm, Sweden, sold between January 2010 and December 2011. Findings The results show that jump bidding has the predicted effect of reducing competition by scaring off bidders. However, a higher average bid increment leads to a higher selling price. Furthermore, results show that a fast auction in terms of average time between bids acts to increase the probability of so-called auction fever as both the number of bidders and the selling price are positively correlated with the speed of the auction. While the average behavior of all auction participants, in terms of jump bidding and time between bids, significantly affects auction outcomes, differences in strategies applied by winners and losers show mixed results. The results of this study with respect to sellers’ list price strategy show that underpricing is an ineffective strategy in terms of enticing more bidders to participate in the auction. Furthermore, underpricing is not sufficient to have a positive effect on the selling price. Originality/value This paper is one of the first papers to empirically analyze how different bidding strategies affect the outcome of residential real estate auctions in terms of competition and the final selling price.

Publisher

Emerald

Subject

Economics and Econometrics,Finance,Accounting

Cited by 10 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. The middleman dilemma: exploring the relationship between formal ethics and ethics in practice among real estate agents in Sweden;Journal of European Real Estate Research;2024-05-16

2. Evaluation of an Apartment Selection Model by Integrating Fuzzy AHP and Fuzzy TOPSIS;International Journal of Fuzzy System Applications;2022-11-16

3. The blockchain challenge for Sweden's housing and mortgage markets;Environment and Planning A: Economy and Space;2022-08-17

4. Hijacking the auction – seller's or buyer's curse?;Journal of European Real Estate Research;2022-03-21

5. Aggressive bidding strategies in real estate auctions – a structural equation modelling (SEM) approach;Journal of European Real Estate Research;2021-05-27

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