Time on the Market and Selling Price

Abstract

This study is primarily an analysis of tradeoff between selling time and price, both on a nominal and real basis. Sellers are seen as desiring to maximize their discounted real selling price and trading off the nominal selling price with expected selling time. The time a property remains on the market is important, not only because of its reflection on price, but also because of its possible reflection on the issue of submarket equilibrium-an assumption in most urban price studies. The empirical results of this study shed light on how similar studies can easily misinterpret the implications of time on the market on price and how further work may be improved. Copyright American Real Estate and Urban Economics Association.

Price spreads and residential housing market liquidity

“…Belkin, Hempel, and McLeavey (1976) show that TOM is negatively related to the ratio of the contract price to the listing price (the concession ratio). Miller (1978) demonstrates that TOM is positively correlated with selling price. His results are corroborated by Haurin (1988), who shows that TOM is positively associated with the atypicality of a house.…”

“…3 As Miller (1978) has argued, the seller adopts this strategy in the hopes of receiving all possible bids. The seller also has an acceptance price, (p'), such that if a buyer offers at least the acceptance price, the offer will be accepted.…”

“…A seller who declines an offer forgoes the use of capital equal to the contract price (net of expenses) until an acceptable offer is found. A high opportunity cost may induce a seller to accept a low bid because it has a higher present value than a higher price received after a longer period of time (Miller, 1978). Accordingly, the present value of the net selling price is maximized according to seller's opportunity cost of time (Miller and Sklarz, 1988).…”

Days on Market and Home Sales

“…For instance, using days on market as one of the independent variables to explain sale price, Miller (1978) finds that sale price increases with days on market. On the other hand, Belkin et al (1976) consider days on market as the dependent variable and provide evidence that if sale price is higher, then days on market are longer.…”

The Impact of Pricing on Time-on-Market in High-Rise Multiple-Unit Residential Developments

“…The popular employment of regression models for TOM is due to its simplicity (Belkin et al, 1976;Kang and Gardner, 1989;Miller, 1978;Sirmans et al, 1991;Yavas and Yang, 1995a).…”