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Research Seminars & Workshops @ IRES


Presenter:Dr Chow Yuen Leng

Assistant Professor, Dept of Real Estate, NUS

Discussant:Professor Timothy Riddiough

Professor and E.J. Plesko Chair of Real Estate and Urban Land Economics
University of Wisconsin-Madison


Auction Versus Negotiated Sale: Evidence from Real Estate Sales


Date:

16 May 2011 (Mon)

Time:

4.00 pm - 5.30 pm

Venue:

RMI Executive Seminar Room
21 Heng Mui Keng Terrace, Level 4


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 buyer with higher valuations. Using data from property sales in Singapore, we find support for our theoretical predictions that the auction mechanism obtains a higher relative price in an "un market" than in a flat or down market, in the high-end segment of the property market, and for relatively homogeneous properties than heterogeneous properties.

Keywords

Auction, Negotiated Sale, Market Conditions, Product Homogeneity, Foreclosure


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