Koster, HansR.A. and Rouwendal, J. (2024). HOUSING MARKET DISCOUNT RATES: EVIDENCE FROM BARGAINING AND BIDDING WARS International Economic Review, 65(2):955--1002.
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Affiliated authors
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Publication year2024
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JournalInternational Economic Review
When selling a home, through the choice of the list price, sellers make a trade-off between achieving a quick sale at a low price or waiting for higher bids. This list-price setting decision is governed by a discount rate. Using data on housing sales in the Netherlands, we derive gross discount rates under bilateral bargaining and bidding wars. The estimated discount rates are 25%–35%, which are considerably higher than long-run housing market discount rates and may result from the seller's unfamiliarity with the selling process. The rates are higher for sellers that already moved and have a low education.