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THE HOME SELLING PROBLEM: THEORY AND EVIDENCE
Author(s) -
Merlo Antonio,
OrtaloMagné François,
Rust John
Publication year - 2015
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12111
Subject(s) - listing (finance) , database transaction , key (lock) , transaction cost , transaction data , econometrics , value (mathematics) , economics , microeconomics , computer science , mathematics , statistics , database , finance , computer security
We formulate and solve the problem of a homeowner who wants to sell her house for the maximum possible price net of transactions costs. We estimate this model using data on transaction histories for 780 residential properties in England. The estimated model fits list price dynamics and other key features of the data. In particular, a tiny menu cost of changing the listing price, as little as ten thousandths of 1% of the house value, is sufficient to explain the high degree of stickiness of listing prices observed in the data.