Seller Motivation Affects House Prices, Selling Time

REASONS FOR SELLING HOUSE MAY AFFECT FINAL PRICE, SELLING TIME

COLUMBUS, Ohio -- New research confirms what many real estate agents probably suspected: A homeowner's motivation to sell affects the final selling price and how long a house stays on the market.

The study shows that sellers with a high motivation to sell -- such as those who have already purchased another home -- had their houses on the market for up to 30 percent less time than other sellers.

In addition, the results suggest that highly motivated sellers end up selling their homes for about 10 to 11 percent less than similar homes owned by less-motivated sellers.

"People who have a new job, or have bought another home, may not have time to wait for the highest possible offer," said Donald Haurin, co-author of the study and professor of economics at Ohio State University.

"These highly motivated sellers end up selling their homes more quickly and for less money."

Haurin conducted the study with Patric Hendershott, a professor of finance at Ohio State's Fisher College of Business, and Michel Glower of the National Association of Home Builders. Their results appear in the current issue of the journal Real Estate Economics.

Data for the study were collected by conducting a telephone survey of sellers who had listed their homes for sale with the HER brokerage in Columbus between April 30, 1990, and December 31, 1991.

The researchers asked a variety of questions to determine how motivated the sellers were to complete a sale quickly. For example, the researchers asked sellers if they had a planned date to move, had a new job, or had made an offer on or already purchased another home.

While the results showed that highly motivated sellers sell their houses more quickly and for less money, the results did not show that these sellers set their original list price lower than did other homeowners.

"We believed that list price would be lower for highly motivated sellers, but we didn't find that," Haurin said. "It may be that highly motivated sellers start with the same list price, but they reduce it more quickly than do others. It's also possible that highly motivated sellers don't reduce their list price, but are more likely to accept lower offers."

Haurin said the effect of seller motivation on housing prices has not been given the attention it deserves. One reason is that information on why a homeowner has chosen to sell his or her property is seldom available. That's why the researchers had to develop a survey, Haurin said.

Also, he said researchers have long assumed that house prices are determined by the market and that the characteristics of the buyer and seller don't make a difference. These results show otherwise, he said. "We found that homeowners vary quite a bit in their motivation to sell, and those differences play a role in sales price and selling time," he said.

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