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Setting Offer Prices by Housing Developers - Selected Issues in the Light of Literature Review

Setting Offer Prices by Housing Developers - Selected Issues in the Light of Literature Review Abstract This paper deals with selected theoretical issues pertaining to the setting of asking prices by housing developers. Determinants of the buyer’s and seller’s reservation prices have been identified. The advantages and disadvantages, in terms of behavioral economics, of the pricing strategies practiced by housing developers have been indicated. The strategy based on fixing an asking price roughly equal to the estimated market value of the property was compared with the strategy based on offering an inflated asking price (with the assumption of price negotiations). A second comparison concerned the strategy of price disclosure compared with the strategy of price non-disclosure. The reflections contained within the article were based on behavioral economics and marketing theory. The discussion was based largely on foreign articles, observed examples of pricing policy carried out by housing developers in Poland, and information obtained from housing developers and real estate brokers who are active on the primary market. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Real Estate Management and Valuation de Gruyter

Setting Offer Prices by Housing Developers - Selected Issues in the Light of Literature Review

Real Estate Management and Valuation , Volume 22 (4) – Feb 6, 2015

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Publisher
de Gruyter
Copyright
Copyright © 2015 by the
ISSN
2300-5289
eISSN
2300-5289
DOI
10.2478/remav-2014-0033
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper deals with selected theoretical issues pertaining to the setting of asking prices by housing developers. Determinants of the buyer’s and seller’s reservation prices have been identified. The advantages and disadvantages, in terms of behavioral economics, of the pricing strategies practiced by housing developers have been indicated. The strategy based on fixing an asking price roughly equal to the estimated market value of the property was compared with the strategy based on offering an inflated asking price (with the assumption of price negotiations). A second comparison concerned the strategy of price disclosure compared with the strategy of price non-disclosure. The reflections contained within the article were based on behavioral economics and marketing theory. The discussion was based largely on foreign articles, observed examples of pricing policy carried out by housing developers in Poland, and information obtained from housing developers and real estate brokers who are active on the primary market.

Journal

Real Estate Management and Valuationde Gruyter

Published: Feb 6, 2015

References