Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Aggressive bidding strategies in real estate auctions – a structural equation modelling (SEM) approach

Aggressive bidding strategies in real estate auctions – a structural equation modelling (SEM)... This paper aims to study aggressive bidding strategies in real estate auctions – a structural equation modelling (SEM) approach.Design/methodology/approachThe authors use two data sets to study aggressive bidding strategies. First, the results from a survey with 1,803 participants examining real estate auctions are used to identify bidding strategies and related motivations. Second, the authors apply SEM by using data from 1,078 exclusive auction journals from real estate sales in Norway to study both the direct and indirect price effects of the bidding strategies.FindingsThe authors define four aggressive bidding strategies: high opening bid, high bid increase (jump bids), short acceptance deadline and short response time. The authors find that all four strategies yield a higher sales price. Bidders can actively influence the behaviour of the other participants and cool the potential auction fever, thus reducing the final price premium.Originality/valueThis paper gives households, investors and policymakers a better understanding of how bidding strategies affect real estate auctions and the final price. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of European Real Estate Research Emerald Publishing

Aggressive bidding strategies in real estate auctions – a structural equation modelling (SEM) approach

Download PDF
17 pages

Loading next page...
 
/lp/emerald-publishing/aggressive-bidding-strategies-in-real-estate-auctions-a-structural-Xlb6eImKU3
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1753-9269
eISSN
1753-9269
DOI
10.1108/jerer-09-2020-0049
Publisher site
See Article on Publisher Site

Abstract

This paper aims to study aggressive bidding strategies in real estate auctions – a structural equation modelling (SEM) approach.Design/methodology/approachThe authors use two data sets to study aggressive bidding strategies. First, the results from a survey with 1,803 participants examining real estate auctions are used to identify bidding strategies and related motivations. Second, the authors apply SEM by using data from 1,078 exclusive auction journals from real estate sales in Norway to study both the direct and indirect price effects of the bidding strategies.FindingsThe authors define four aggressive bidding strategies: high opening bid, high bid increase (jump bids), short acceptance deadline and short response time. The authors find that all four strategies yield a higher sales price. Bidders can actively influence the behaviour of the other participants and cool the potential auction fever, thus reducing the final price premium.Originality/valueThis paper gives households, investors and policymakers a better understanding of how bidding strategies affect real estate auctions and the final price.

Journal

Journal of European Real Estate Research – Emerald Publishing

Published: Jul 23, 2021

Keywords: SEM; Housing; Aggressive bidding; Bid strategies; English auctions

References

  • Equilibria in open common value auctions
    Bikhchandani, S.; Riley, J.G.
  • Impact of number of bidders on sale price of auctioned condominium apartments in Stockholm
    Hungria-Gunnelin, R.
  • An analysis of auction strategies in apartment sales
    Hungria-Gunnelin, R.
  • The impact of strategic jump bidding in residential English auctions
    Khazal, A.; Sønstebø, O.J.; Olaussen, J.O.; Oust, A.
  • A theory of auctions and competitive bidding
    Milgrom, P.R.; Weber, R.J.
  • Exchange rates
  • Norges eiendomsmeglerforbund, regler for budgivning. (Norwegian association of real estate agents, bidding rules)
  • Forskrift om eiendomsmegling
  • Jump bids in real estate auctions
    Sommervoll, D.E.
  • Opening bid strategies in English auctions
    Sønstebø, O.J.; Olaussen, J.O.; Oust, A.
  • Bidding round survey report
    Sønstebø, O.J.
  • Earnings, 2015
  • Step your way through path analysis
    Suhr, D.
  • Counterspeculation, auctions, and competitive sealed tenders
    Vickrey, W.